Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Kudlow. Photo: Drew Angerer/Getty Images

Top White House officials have bluntly warned the head of a board that administers railroad workers' retirement benefits that the investment trust he oversees is exposing investors to undue economic risk and endangering U.S. national security because it invests in certain Chinese companies.

Driving the news: The letter, dated July 7 and obtained by Axios, asks for a response within a week as to whether the U.S. Railroad Retirement Board, an independent federal agency, will cut off these Chinese investments.

Why it matters: This is the latest action the Trump administration has taken to curtail U.S. investment in China — part of a broader pressure campaign the administration is waging against the Communist Party of China.

Behind the scenes: Trump's national security and economic advisers Robert O'Brien and Larry Kudlow use the letter to take board chairman Erhard Chorle to task — and raise the prospect that these investments could be unlawful without being explicit about what they'll do if the board doesn't change course.

  • They scold Chorle for "permitting hundreds of millions of dollars of railroad workers' retirement assets to be invested in companies from the People's Republic of China (PRC)...that present a national security risk to our country."
  • They allege that the investment trust "exposes the retirement funds of railroad workers" to significant risk and that the investments channel money from American workers into Chinese companies that violate U.S. sanctions and "assist the PRC's efforts to build its military and oppress religious minorities."
  • Chorle is a Trump nominee. His term is set to run into 2022.

“The investment of the retirement savings of hardworking Americans in Chinese companies is neither prudent from a risk perspective nor responsible from a long term strategic perspective, especially given China’s culpable actions with respect to the pandemic,” National Security Council spokesman John Ullyot said in a statement.

O'Brien and Kudlow allege that the list of companies that receive railroad workers' retirement investment funds includes "contractors that provide military aircraft, missiles, and telecommunications support to the People's Liberation Army..."

  • "...companies like Hikvision that manufacture surveillance equipment that China uses to oppress religious minorities, and at least one company, ZTE, engaged in a multi-year conspiracy to supply, build, and operate telecommunications networks in Iran using U.S.-origin equipment in violation of the U.S. trade embargo, and committed hundreds of U.S. sanctions violations involving the shipment of telecommunications equipment to North Korea."

The other side: Board spokesman Michael Freeman said the board "is looking into the issues raised in the letter" and will respond directly to O'Brien and Kudlow. He said the National Railroad Retirement Investment Trust manages most railroad retirement funds, not the board, and that the board would discuss the issues with them.

The big picture: Chinese state secrets law forbids Chinese companies listed on U.S. stock exchanges from complying with many audit requirements mandated by U.S. law, meaning that economic risks from fraudulent practices, and political risks from close association with Chinese entities that are or may become sanctioned, are not disclosed.

  • As Axios recently reported, these concerns drove a recent bipartisan Senate vote to delist Chinese companies that do not allow third-party audits.

Editor's note: This story has been updated with a statement from the board.

Go deeper

Ina Fried, author of Login
Sep 29, 2020 - Technology

U.S.-China fight spreads to the chip factory

Illustration: Aïda Amer/Axios

The Trump administration's campaign against TikTok gets all the headlines, but the U.S. move last week to place restrictions on Semiconductor Manufacturing International Corp. (SMIC), China's top chipmaker, could end up making a greater difference.

Why it matters: Semiconductor analysts say SMIC represented China's strongest bid to build a domestic chip industry and bolster its tech independence. Sanctions that cut off its access to advanced manufacturing and testing equipment from the U.S. could seriously set that effort back.

Dion Rabouin, author of Markets
Sep 29, 2020 - Economy & Business

China is attracting global investors' attention, boosting the yuan

Data: FactSet; Chart: Axios Visuals

The dollar strengthened against most of the world's currencies last week, as traders bought the greenback expecting an end to the reflation trade, but China's currency bucked the overall trend (pun intended) and is on pace for its strongest month against the dollar since 2008.

Why it matters: "What we do see is a strong Chinese economy, which is part of what’s behind the strong renminbi," Jason Brady, president and CEO of Thornburg Investment Management, told WSJ.

50 mins ago - World

Israeli intel agencies believe Vienna talks will lead to U.S. return to Iran nuclear deal

Photo: DEBBIE HILL/AFP via Getty Images

Israeli military intelligence and senior officials in the Mossad briefed a meeting of the nation's security cabinet that talks in Vienna between Iran and other world powers will lead to the U.S. returning to the 2015 nuclear deal, two officials who attended the meeting told me.

Why it matters: The Israeli government is very concerned about a U.S. return to the nuclear deal and is trying to convince the Biden administration not to take the pressure off the Iranian regime.

You’ve caught up. Now what?

Sign up for Mike Allen’s daily Axios AM and PM newsletters to get smarter, faster on the news that matters.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!