[Congressional Record Volume 140, Number 43 (Tuesday, April 19, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          AMERICAN PENSION FUNDS INVESTED IN FOREIGN COUNTRIES

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
February 11, 1994, the gentlewoman from Maryland [Mrs. Bentley] is 
recognized during morning business for 5 minutes.
  Mrs. BENTLEY. Madam Speaker, China's new goal of enticing the world's 
fund managers with offers of shares in 22 state-owned companies is 
meeting with success. Last fall China attracted the heads of American 
corporate and municipal pension funds with $500 million for investment 
in China and Asian mutual funds.
  In that earlier meeting 100 of our biggest funds were matched up with 
100 Chinese banking and financial ministers in a conference to plan how 
to take our pension fund money to use in building up China in what the 
organizers of the trip called ``The Last Frontier of Capital.''
  Most revealing about the intentions of both China and the managers 
was the title of the conference, which was billed as ``The Chinese 
Century--From Wall Street to the Great Wall.''
  A recent Wall Street Journal editorial had an interesting question 
about the drive to attract foreign wealth. It pointed out, ``It would 
be interesting to know what China's home-grown wealthy are doing with 
their own money. The data strongly hints that large sums are being 
funneled out of China without anybody knowing where they're going or 
whom they belong to.''
  The Wall Street Journal raised some interesting questions about China 
and its trade statistics. The figures are revealing. In checking the 
balance of payments in 1992, it is suspected that $8 billion 
disappeared offshore.
  The article quoted Frank Gunter of Lehigh University, who compared 
China's trade statistics with its major trading partners. He found that 
$20 billion a year is lost through phony import and export invoices. 
The money is going somewhere and the speculation is the newly rich in 
China are scattering their funds so they will be able to keep their 
money. Obviously, there is plenty of risk in investing in China.
  The question was raised in the article whether or not lenders to 
China can be so confident--

     that the billions loaned directly to Beijing aren't being 
     squandered or salted away. Nor can the share investors now 
     being courted to become Beijing's partners in dozens of state 
     enterprises discount the possibility that their funds will 
     not end up in the regime's retirement accounts rather than 
     paying to upgrade production and return them a profit.

  That's ironic, when the Wall Street Journal is reporting that some 
American government workers are forced into working longer because the 
State has postponed their retirement because of costs. In fact State 
and local government pensions are underfunded by $125 billion. Counting 
in Federal and military pensions there is a $1.24 trillion shortfall.
  We should also consider that China intends to lift everyone out of 
poverty by the year 2000. That is an admirable goal, but it will 
require a great deal of money and extraordinary effort on the part of 
government officials and the money must come from somewhere.
  It also means that the industrialized world will be greatly affected. 
We are investing $500 million of American pension money in a country 
which pays low wages and practices minimal human rights. The other 
countries of Asia also pay low wages.
  Our funds will help China to build railroads, highways, and other 
infrastructure projects, which could take decades to show a return on 
investment. Why not use those funds to help working Americans instead 
of having fund managers play their games of international financial 
intrigue?
  Pension funds should be a ready source of funds for American 
business. Investing pension funds in China or Asia ultimately helps 
countries and companies which can come back and compete with the very 
American companies and municipal governments investing their money 
abroad. This is called ``hollowing out'' the job market and our pension 
funds. Good deeds begin at home, and that means better treatment of the 
American people. They deserve better treatment from both the fund 
managers and the Government.

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