U.S. public pension funds are continuing to invest in China-based organizations despite regulatory issues from the Chinese government, according to a recent Wall Street Journal article. “For the past several years, the retirement savings of America’s police, firefighters and teachers have increasingly found their way to private companies in China such as Ant,” the article states.

Ant Group Co. is an affiliate company of the China-based Alibaba Group, a technology company specializing in e-commerce, retail, Internet, and technology. Ant Group was scheduled to have one of the largest initial public offerings in October 2020—some estimates claim the company could’ve raised $34.5 billion at the time—but the Chinese government halted the offering at the request of Chinese Community Party leader Xi Jinping.

Chinese companies like Ant have become popular among U.S.-based investors, the Journal reports.

“Private-equity-backed deals of $300 million or more in China involving exclusively U.S.-based investment managers totaled nearly $13 billion between 2010 and 2019, according to Preqin data,” the paper reported. “Deal activity peaked in 2018 at $3.78 billion.”

The Chinese government has meddled in business affairs before, but that hasn’t caused pension fund managers divest from companies like Ant. “We expect a much higher return out of private markets and particularly venture capital,” Andrew Junkin, chief investment officer of the Employees’ Retirement System of Rhode Island, told the Journal.

Some pension fund managers claim they’re at the mercy of China-based companies to help plug their pension funding shortfalls. According to Equable’s State of Pensions 2020 December update, unfunded liabilities totaled $1.34 trillion across all state pension plans.

“From a broad level portfolio perspective, you almost have no choice but to think very seriously about going to parts of the world where there is a lot more growth,” said Kewsong Lee, Caryle Group chief executive, at a January board meeting of the California State Teachers’ Retirement System, according to the Journal.

Still, some are hesitant to continue pouring money into such companies.

“I’m still struggling with reconciling the tension of absolute control versus this entrepreneurial dynamic innovative spirit,” CalSTRS Board Vice Chairwoman Sharon Hendricks said at the board’s January meeting, according to the Journal. “And yet it seems like we’re bullish on innovation in China.”

And in Indiana, lawmakers have proposed a bill that would have its pension systems divest from any China-affiliated businesses.

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This article republishes selections from “Underfunded and Under Pressure, U.S. Pensions to Keep Investing in China,” by Heather Gillers for The Wall Street Journal on Feb. 19, 2021.