Texas Governor Mandates State Agencies To Divest From China: 'Will Defend And Safeguard Itself...From Any

Texas Governor Greg Abbott (R-Texas) has directed state agencies to cease investments in China and divest existing ones. This decision, announced in a letter dated Nov. 21, highlights security and financial risks associated with Chinese investments,

What Happened: Abbott’s directive argues that this aggression could elevate the financial risks tied to Chinese investments. The governor’s letter explicitly bans Texas investing entities from making new investments in China.

Moreover, Abbott has instructed these entities to divest from any current Chinese investments at the earliest feasible opportunity.

“Texas will defend and safeguard itself and our public treasury from any potential threat, including those posed by the CCP,” the statement read.

Why It Matters: The directive from Governor Abbott comes amid escalating U.S.-China tensions. Recently, the U.S. House of Representatives advanced two Republican bills aiming to reinstate the U.S. Justice Department's "China Initiative." This initiative seeks to curb espionage activities targeting U.S. intellectual property and academic institutions. The bills were part of the House Republican's “China Week,” which saw over two dozen China-related legislative measures passed.

President-elect Donald Trump has proposed to impose 60% tariff on Chinese goods. Chinese President Xi Jinping recently expressed a willingness to collaborate with the U.S. government, regardless of the administration in power. This statement was made during a meeting with President Joe Biden at the Asia-Pacific Economic Cooperation forum in Lima.

Meanwhile, ETFs that allow investment into China have dropped during the past one month. As of Nov. 22nd, according to Benzinga Pro, the KraneShares CSI China Internet ETF (NYSE:KWEB) has dropped by 5.97% while iShares China Large-Cap ETF (NYSE:FXI) fell by 5.13%. Invesco Golden Dragon China ETF (NASDAQ:PGJ) fell by 5.41% and iShares MSCI China ETF (NASDAQ:MCHI) dropped by 5.54%.

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