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A report by the NGO Hong Kong Watch reveals that quite a few main worldwide pension funds have been closely invested in Chinese language corporations linked to severe human rights points. A few of these pension holders, akin to members of the UK parliament, are regularly confronting their complicity in financing these abuses and calling for change. Whereas cash from worldwide pension funds continues to movement into China regardless of allegations of human rights abuses, cash from Hong Kong’s personal pension funds have flown out in current months, because of comparable points.
Hong Kong Watch’s report supplied an in depth image of the worldwide pension funds’ Chinese language investments. The 84-page report included info on the worldwide pension funds concerned, their public “Environmental, Social, and Governance” (ESG) commitments, their Chinese language funding portfolios, statistics on the tens of billions of {dollars} they collectively invested, and the troubling human rights data of notable Chinese language corporations. By way of the lenses of human rights, environmental safety, and nationwide safety, the report identifies 4 forms of problematic Chinese language companies receiving funding from worldwide pension funds: these blacklisted by the U.S. authorities for ties to the PLA or human rights abuses in Xinjiang; different Chinese language tech companies complicit in human rights abuses in Xinjiang; Chinese language state-owned banks that bankroll state-owned enterprises; and Chinese language fossil gas giants.
The report spotlights Alibaba and Tencent as main funding locations of concern, attributable to their function in alleged human rights abuses in Xinjiang and different elements of China. Because the report notes, Alibaba has produced facial recognition software program that particularly targets Uyghurs and helped construct the Xinjiang internment camps. Tencent owns WeChat, which allows the CCP’s intensive censorship and surveillance of the app’s 1.25 billion customers.
New Report: ESG, China and Human Rights | Why the time has come for buyers to behave
Regardless of gross human rights violations in HK and Xinjiang, ties between worldwide finance and China are rising. Can this be justified in period of ESG? No.
Thread 1/👇 https://t.co/dcysK2ovOl
— Hong Kong Watch (@hk_watch) September 23, 2021
A Hong Kong Watch assertion concerning the report mentioned the hole between ESG commitments and precise investments, and between buyers and the general public:
A brand new report by Hong Kong Watch exhibits that, regardless of lip-service to the significance of accountable investing and ESG priorities, main worldwide pension funds are closely invested in Chinese language corporations with problematic human rights data.
Hong Kong Watch’s new report considers the paradox that funding into China has soared within the period of moral funding. Extra money is being invested in China by Western pension funds, sovereign wealth funds and different institutional buyers than ever earlier than.
[…] Johnny Patterson, Coverage Director of Hong Kong Watch, says: “There’s a clear information hole between monetary professionals who know that giant quantities of the cash of odd individuals, institutional funding, pensions and authorities funding is being invested in China, and the members of the general public, media and coverage makers who would have severe moral and sensible reservations about what appears to be a reckless and problematic plan of action. This info hole has supplied cowl for monetary establishments to pursue revenue with out regard for the social impacts of their ties with companies which are intently affiliated with egregious rights abuses in Hong Kong or Xinjiang.” [Source]
The U.Okay. parliament’s pension fund was a kind of singled out by the report. Based on Hong Kong Watch, the fund had a minimum of $1.23 million invested in Alibaba and $3.16 million in Tencent, together with different investments in China Development Financial institution and Sinopec. In response to the report, 117 British Members of Parliament and 20 members of the Home of Lords penned a letter to the fund’s trustees urging the fund to divest from Chinese language corporations accused of being complicit in human rights violations or having ties to Beijing. Patrick Wintour from the Guardian reported on the signatories and their motivation to take motion:
The signatories embody Lisa Nandy, the shadow international secretary, and the previous Conservative cupboard ministers Liam Fox, Iain Duncan Smith and Norman Tebbit. Others embody the Liberal Democrat international affairs spokesperson, Layla Moran, and the shadow international affairs minister, Stephen Kinnock. The Conservative MP David Amess was additionally a signatory, considered one of his final political acts earlier than his dying on Friday.
[…] The Labour MP Siobhain McDonagh, a number one signatory and member of the Treasury choose committee, stated: “When the world is offered with such overwhelming proof of gross human rights abuses, no person can flip a blind eye.
“However we should additionally ask ourselves what it means to be complicit and that’s why I’m horrified to study that our personal pension fund is invested in Chinese language establishments with shut ties to the state. If we glance on, historical past will condemn our unforgivable cowardice and ask why these in energy didn’t act. Heat phrases are merely not sufficient as a result of this time nobody can say that they didn’t know.” [Source]
The signatories calling for scrutiny of Chinese language equities within the fund embody @lisanandy, the shadow international secretary and @SKinnock shadow Asia Minister, and the previous Conservative cupboard ministers Liam Fox, @MPIainDS and Norman Tebbit.
The letter in full 👇 pic.twitter.com/1vBs6UuLTb
— Hong Kong Watch (@hk_watch) October 19, 2021
Britain offers an attention-grabbing case research for a way international governments may reply to revelations of their monetary entanglement in problematic Chinese language companies. The British authorities is properly conscious of the problems: in March, the U.Okay. International Secretary sanctioned 4 Chinese language officers deemed answerable for the alleged genocide towards Uyghurs in Xinjiang, which led to the Chinese language authorities relatiating with sanctions towards 5 British Members of Parliament. In April, the Home of Commons handed a movement declaring the Chinese language authorities’s insurance policies in Xinjiang a genocide. In September, the British Parliament symbolically banned Chinese language ambassador Zheng Zeguang from coming into parliament. However political momentum for safeguarding human rights could not essentially produce a change in British investments, in line with Prime Minister Boris Johnson, who said this week that the U.Okay. authorities won’t “pitchfork away each [investment] overture from China.”
“What we clearly must be cautious of, is making funding choices primarily based on reflecting private positions,” says Conservative MP Matt Warman
A gaggle of MPs have written a letter to complain that their pension funds are investing in China
https://t.co/0v4z34GUnX #PoliticsLive pic.twitter.com/DJfwFflIdH— BBC Politics (@BBCPolitics) October 20, 2021
Past Britain, the report spotlights a number of different governments whose pension fund investments in China are much more troubling. The Australian Tremendous Fund has invested about US$2.4 million in Hikvision and virtually US$900,000 in iFlytek, two Chinese language corporations which have developed surveillance software program to assist the Chinese language authorities goal Uyghurs in Xinjiang; the fund has additionally invested US$403 million to Alibaba and US$293 million to Tencent, orders of magnitude greater than the British parliament. In Asia, the Japanese authorities’s pension fund has invested US$2.04 billion to Alibaba and US$1.74 billion to Tencent, and the Nationwide Pension Service of South Korea has invested probably the most out of the entire funds analyzed within the report: US$12.15 billion in Alibaba and US$9.11 billion in Tencent. In North America, Canada’s Pension Plan Funding Board has invested US$2.23 billion in Alibaba and US$3.51 billion in Tencent, and Canada’s British Columbia Funding Administration Company has invested a mixed complete of US$880,000 million in Alibaba and Tencent.
MP David Amess was a signatory, considered one of his final political acts earlier than his dying. This follows findings the parliamentary fund had £2.9M invested in Chinese language Alibaba & £900,000 Tencent.
Canada eclipses that. Mixed Tencent and Alibaba holdings by the Canada Pension Plan: $7.17B. https://t.co/gqAOYqqlfu
— Andy Lee (@Hannah_Bananaz) October 19, 2021
Within the U.S., pension funds at Princeton and Columbia College are equally complicit. Dennis Kwok and Johnny Patterson highlighted these funds’ investments in a Wall Avenue Journal opinion piece:
A brand new Hong Kong Watch report on institutional funding around the globe has implications for U.S. retirement buyers. Think about one instance: Vanguard manages educational and workers retirement funds for a number of elite U.S. establishments, together with Princeton and Columbia. Between 22% and 35% of every retirement fund is allotted to the Vanguard Whole Worldwide Inventory Index Fund, relying on the retirement date of pensioners. As of July 31, this fund, which isn’t ESG-driven, held $4.4 billion in Alibaba, $4.6 billion in Tencent, $17.3 million in Iflytek, $7.6 million in Dahua Know-how, $23 million within the Aviation Trade Corp. of China, and almost $2 billion in China’s prime 4 state-run banks. [Source]
Institutional Investor | Funds Invested in Alibaba | Funds Invested in Tencent | Different key Chinese language Equities |
---|---|---|---|
UK Parliamentary Contributory Pension Fund | £0.9m (US$1.23m) | £2.3m (US$3.16m) | China Development Financial institution, Sinopec, CNOOC (Till 2019) |
UK Universities Superannuation Scheme | £371.79m (US$511m) | £413.96m (US$569m) | China Development Financial institution, Sinopec |
Australian Tremendous Fund (Balanced pre-mixed funding possibility) | AU$563m (US$403m) | AU$409m (US$293m) | Financial institution of China (AU$4.9m), China Development Financial institution (AU$9m), Hikvision (AU$3.2m), Iflytek (AU$1.2m), China Cellular (AU$13.3m) |
Norwegian Sovereign Wealth Fund | US$6.7bn | US$5.9bn | Sinopec (US$205m), Baidu (US$759m), Financial institution of China (US$261m), China Development Financial institution (US$1bn), China Cellular (US$371m), SMIC (US$92m), China Unicom (US$42m) |
New Zealand Superannuation Fund | NZ$93.47m (US$64.68m) | NZ$87.95m (US$60.87m) | 14 entities sanctioned by US together with: AVIC (NZ$250,933), China Communications Development Co. (NZ$472,202), China Cellular (NZ$7,151,619), Hikvision (NZ$961,223), China Unicom (NZ$219,492), SMIC (NZ$2,306,284), Zhejiang Dahua Know-how (NZ$219,670). Others together with: iFlytek (NZ$229,702), Financial institution of China (NZ$5,871,296), China Development Financial institution (NZ$15,384,971) |
BCI (Canada) | CA$1.1bn within the two mixed (Mar,2020) (US$887m) | March 2020: China Communication Development Group (CA$2m), CNOOC (CA$56.1m), Hikvision (CA$45.3m), China Cellular (CA$104.6m), Zhejiang Dahua Tech (CA$14.42m), China Development financial institution (CA$91.98m) | |
CDPQ (Canada) | CA$938.6m (US$744m) | CA$666.9m (US$529m) | 18 corporations on the US sanctions listing, together with: AVIC, CNOOC Ltd, CoStar Group Inc, Interior Mongolia First Equipment Group Co, Zhejiang Dahua Know-how Co, and Semiconductor Manufacturing Worldwide Corp. |
Japan Authorities Pension Funding Fund | £2.57bn (US$2.04bn) | £2.2bn (US$1.74bn) | Sinopec (£62 million) |
Whereas cash has poured into China from international pension funds, cash is flowing out of Hong Kong’s. Inflows into Hong Kong’s pension fund started declining within the second quarter of 2020, and this quarter they reached their lowest level in three years. The drop coincides with the deteriorating human rights scenario underneath the Nationwide Safety Regulation, which has pushed over 90,000 Hong Kong residents to to migrate and lower town’s inhabitants by 1.2 p.c. Reuters reported on the Hong Kong pension fund capital flight:
Residents leaving Hong Kong withdrew HK$2.095 billion ($270 million) from Obligatory Provident Fund (MPF) pension accounts within the second quarter, up 111.6% from the identical interval in 2020.
A sweeping safety regulation imposed on Hong Kong in June 2020, geared toward something Beijing regards as subversion, secession or terrorism, prompted residents of town to maneuver tens of billions of {dollars} to different nations together with Canada, the place hundreds hope to forge a brand new future. learn extra
A complete of 8,000 claims have been made through the second quarter of 2021, information from the Obligatory Provident Fund Schemes Authority on Tuesday confirmed. That in contrast with 6,000 claims throughout the identical interval in 2020, when HK$990 million was withdrawn. (https://bit.ly/3n8NCzP).
There have been 7,700 claims through the first quarter of 2021, when HK$1.931 billion was withdrawn, marking an increase of 49.1% from the identical quarter in 2020. [Source]
Worldwide criticism on human rights abuses in China has been fierce and widespread. However lots of the identical individuals and establishments that voice this criticism enable their pensions to pump extra funding into Chinese language companies concerned in these exact same human rights abuses:
Unbelievable query from Simon O’Connor right here. The hypocrisy of a few of these funds solely turns into clear whenever you see them squirm as they justify investing in corporations which have helped construct the Xinjiang surveillance state. https://t.co/Xg5rYk2Dqb
— Johnny Patterson (@Johnny_HKWatch) October 21, 2021
“A fast have a look at their China investments finds them invested in an organization which just lately had two subsidiaries positioned on a US commerce blacklist.
“This appears onerous to reconcile with the agency’s personal pointers – and naturally Baillie Gifford is much from alone.”https://t.co/jXHfgNAuau
— Hong Kong Watch (@hk_watch) October 18, 2021
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