Trump administration reportedly considering limits on pension investments in Chinese stocks

Key Points
  • The White House is deliberating about limiting government pension investment in China, Bloomberg News says.
  • The White House  previously denied reports it is considering ways to limit U.S. investments in China.
  • Trade talks between the world's two largest economies are set to resume on Thursday.
US President Donald Trump speaks to the press as he departs the White House in Washington, DC, for his annual visit to Walter Reed National Military Medical Center, on October 4, 2019.
Andrew Caballero-Reynolds | AFP | Getty Images

The White House is discussing blocking government pension funds from investing in China, Bloomberg News reported Tuesday.

The White House previously denied reports that it is considering ways to limit U.S. investments in China. White House adviser Peter Navarro told CNBC the reports were "fake news." However, people familiar with the matter told Bloomberg News that Trump officials met last week about the deliberations.

In addition to curbing government pension investments, the administration is now honing in on how to limit stock index providers from including Chinese stocks. National Economic Council Director Larry Kudlow held a policy meeting last week with officials from the National Security Council and the Treasury Department, reports said.

Bloomberg News first reported last month that Trump administration officials are weighing delisting Chinese companies from American stock exchanges and preventing U.S. government pension funds from investing in the Chinese market. The Treasury Department also denied the reports from Bloomberg.

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CNBC also reported the White House is weighing some curbs on U.S. investments in China and even considering possibly blocking all U.S. financial investment in Chinese companies. Restricting investments in Chinese entities would be meant to protect U.S. investors from excessive risk due to lack of regulatory supervision in China, CNBC's source said.

Trade talks between the world's two largest economies are set to resume Thursday. Principal level officials will meet in Washington to discuss a trade deal after both countries slapped tariffs on billions of dollars worth of each other's goods. The South China Morning Post reported China is toning down its expectations ahead of the talks.

Stocks fell Tuesday on investors optimism about the trade negotiations dimmed, and the Bloomberg report seemed to play a part in knocking stock values. The Dow Jones Industrial Average dropped 300 points. The S&P 500 and Nasdaq also fell.

Shares of Chinese companies took a leg lower on Tuesday on the news. Alibaba shares slipped 3.8%, while Baidu fell 1.9% and fell more than 3.9%.

The Japanese yen weakened 0.4% against the dollar.

— Read the full Bloomberg News story here.