SACRAMENTO, California — The California Public Employees’ Retirement System (CalPERS) has drawn bipartisan concern after committing $282 million since 2022 to HongShan, a Chinese venture capital firm previously linked to the Chinese Communist Party. Critics warn the investment not only poses financial risks but could also undermine U.S. national security interests.
A 2024 report by the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party found HongShan — formerly the China branch of U.S. venture capital giant Sequoia — had financed companies connected to China’s military and surveillance state. These included ByteDance, the parent company of TikTok; Yitu, a facial recognition firm sanctioned by the U.S. Treasury for human rights abuses against Uyghurs; and Qihoo 360, a cybersecurity company blacklisted for ties to the People’s Liberation Army.
CalPERS spokesperson Abram Arredondo defended the fund’s global investment strategy, saying it monitors all U.S. regulatory requirements and engages managers to ensure responsible oversight. Still, experts like Diana Furchtgott-Roth of the Heritage Foundation warned the investments expose California retirees to political and economic instability in China. Public finance expert Marc Joffe added that Chinese authorities could “arbitrarily decide to discriminate against foreign investors,” leaving American funds vulnerable.
The issue comes amid broader restrictions on U.S. investment in “national security technologies” following President Biden’s 2023 executive order limiting outbound capital to countries of concern. CalPERS has reportedly lost $7.7 million on its HongShan investment to date.
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