The following memorandum was sent to Iowa House and Iowa Senate Republican leadership and certain other members of the legislature by Donald W. Bohlken, IPERS Recipient, Retired Iowa Administrative Law Judge, and
Attorney.
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Iowa Code Chapter 12K “Restrictions on China-related investments”, enacted in 2023, requires Iowa public funds to disinvest from Chinese government or military controlled companies which are on various federal government lists. These lists ban, by federal law, investment in those companies. [1] In August of 2021, long before the enactment of Chapter 12K, IPERS claimed it already complied with federal bans on ownership of such Chinese securities. [2]
Iowa Code Chapter 12K does not go far enough. The simple fact is that all China domiciled companies are subject to the absolute control of the Chinese Communist Party. [3] All China and Hong Kong domiciled stocks need to be removed from IPERS and other state funds.
In 2023, Rep. Brooke Boden introduced a bill, HF 227, which would have met these requirements. A copy of this bill, labeled Exhibit 1, and documents referenced as exhibits in the footnotes are attached.
The risks of investing in China domiciled companies are far too great to allow them to be held by any public fund. From a past financial performance standpoint, Chinese stocks are not worth the risk. As of 2020, IPERS alone held $943 million of investments in China and Hong Kong domiciled companies, which was “2.63% of the IPERS Trust Fund.” [4] The seventh
largest equity holding of IPERS in 2021 was Tencent Holdings Ltd., a China domiciled company. [5] Tencent Holdings crashed from $99.10 a share on February 8, 2021 to $48.20 in March of 2023. Both Tencent Holdings and the Chinese stock market failed to generate a positive return during that period. Over the same period, the NASDAQ had increased by 50%. [6]
As of 2022, Ten Cent Holdings was no longer in the top ten equity holdings of IPERS. [7] A recent comparison shows that, from March 2022 to July 20, 2025, the NASDAQ 100 (QQQ) increased by 79.17% while the China Stock Market had decreased by 16.40%. [8]
What are the other risks? U.S. Air Force general Mike Minihan predicted that the United States would be at war with China by 2025. [9]
What will Chinese stocks be worth in the event of war with China? What will they be worth if we lose, which is the outcome predicted by many war games? [10] And what will they be worth if we win at the cost of two aircraft carriers and thousands of American lives, as has been alternatively predicted? [11]
But the risks are not limited to war. The survival and profitability of Chinese companies are, by law, subject to the absolute whim of the Chinese Communist Party. Bloomberg has pointed out, “Maintaining social stability [is]. . . one of the signature goals of . . . the ruling Chinese Communist Party, so any company or person it perceives as threatening . . . can find themselves in the cross-hairs. Such a sweeping definition also means just about any large business could find itself the subject of a crackdown.” [12]
Companies can also be targeted because, “those in power grew frustrated with the swagger of tech billionaires and wanted to teach them a lesson.” [13] Companies have been ordered to not make a profit, to not raise capital and to remove their main applications from the internet. [14]
There is no recourse as the legal system is controlled by the Chinese Communist Party. [15] By law, companies must comply with orders of the
government, military and intelligence agencies. [16] For example, in July of 2021, “the Wall Street Journal [reported] that American investors are
asking whether China Inc. is still worth the risk following a widening series of regulatory crackdowns that have wiped some $400 billion off the value of U.S.-listed Chinese companies.” [17]
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There is also a risk that Chinese companies do not meet U.S. accounting standards. Furthermore, “[it] remains certain that Chinese firms like Alibaba will still face delisting risks in the future, even though they may conform to the US’s listing standards now.” [18]
Our moral values militate against trusting the Chinese Communist Party, one of the most brutal governments in history, accounting for the deaths of 80 million of its own people, 330 million forced abortions, and the persecutions of Christian, Muslim, Tibetan, and Falun Gong religions, including using rape as a tool of oppression. [19] The Chinese Communist Party’s
record of negligence (at best) with respect to Covid, theft of intellectual property, and violation of it’s agreement with Great Britain on Hong Kong are so well known as to not require citation of a source.
If China and Hong Kong domiciled stock prices go to zero, every Iowa state retiree and taxpayer will have the right to ask you what were you thinking of when you put state investments in jeopardy? Every citizen will ask, why were you careless with the public funds?
Acting to prohibit investment in China stocks and require disinvestment in those stocks is also consistent with paragraph 17, under the Government section, of the 2024 Iowa Republican Platform, which states, in part: “IPERS should be required by law to divest from holdings in China”. [20]
Republicans cannot rely on retaining control of the state legislature and governor’s office forever in order to justify kicking the can down the road. Now is the time to correct this problem, protect the state’s public funds, taxpayers, and present and retired employees before it is too late.
Please sponsor and pass legislation to totally prohibit investment by public funds in China domiciled companies and to require divestment of those companies presently owned.
Thank you.
Donald W. Bohlken, an IPERS Recipient, is a retired Iowa Administrative Law Judge and Attorney.
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FOOTNOTES:
- Iowa Code sections 12K.1(4), 12K.3 (2025). (Exhibit 2)
- Email from IPERS CEO Greg Samorajski to Donald Bohlken dated 8-3-21. (Exhibit 3).
- Lecture by Dr. Christopher Ashley Ford to the State Department in 2019. https://2017-
2021.state.gov/huawei-and-its-siblings-the-chinese-tech-giants-national-security-and-foreign-
policy-implications/index.html . (Exhibit 4). - Email from IPERS Communications Director Shawna Lode to Donald Bohlken dated 8-4-
- (Exhibit 5).
- IPERS Annual Report 2021 excerpt. (6).
- Stock chart comparing Tencent Holdings, All China Stocks and Nasdaq from March 23,
2020 to March 23, 2023. (Exhibit 7) - IPERS Annual Report 2022 excerpt. (Exhibit 8).
- Stock Chart comparing Nasdaq 100 and All China Stocks from March 2022 to July 20,
- There is also a vertical line, in this chart, marking March 2023. Examining the chart for
the period after that dates shows the continued out performance of the American NASDAQ
versus the China stock market shown in the prior chart, referenced in footnote 6, which ended
in March 2023. (Exhibit 9) - Kube, C., “Air Force general predicts war with China in 2025, tells officers to prep by firing
‘a clip’ at a target, and ‘aim for the head,” (NBC News January 27, 2023)
https://www.nbcnews.com/politics/national-security/us-air-force-general-predicts-war-china-
2025-memo-rcna67967 (Exhibit 10). - Seidel, J., “The US could no longer win a war against China” (May 25, 2020)
https://www.news.com.au/world/north-america/the-us-could-no-longer-win-a-war-against-
china/news-
story/6dea70747914fa1f1984b1c2bc2502d5#:~:text=The%20United%20States%20just%20lo
st%20a%20battle%20to,on%20its%20threats%20to%20invade%20its%20island%20neighbo
ur. (Exhibit 11). - Lendon, B., “War game suggests Chinese invasion of Taiwan would fail at a huge cost to
US, Chinese and Taiwanese militaries” (CNN January 9, 2023)
https://edition.cnn.com/2023/01/09/politics/taiwan-invasion-war-game-intl-hnk-
ml/index.html#:~:text=A%20war%20over%20Taiwan%20could%20leave%20a%20victorious,l
argest%20in%20the%20world%2C%20would%20be%20in%20%E2%80%9Cshambles.%E2
%80%9D Exhibit 12).
- Bloomberg, “Why China Is Cracking Down on Its Technology Giants: QuickTake”
(November 13, 2020)
https://www.bloomberg.com/news/articles/2020-11-13/dissecting-china-s-crackdown-on-its-
internet-giants-quicktake (Exhibit 13) - Id.
- Id.
- Lecture by Dr. Christopher Ashley Ford to the State Department in 2019. https://2017-
2021.state.gov/huawei-and-its-siblings-the-chinese-tech-giants-national-security-and-foreign-
policy-implications/index.html (Exhibit 4). - Id.
- Grimes, Katy, “US Pension Funds Lost $400 Billion on China Investments in July”
(August 3, 2021)(citing Chung, J., et. al., Investors Lost Hundreds of Billions on China in
July (Wall Street Journal July 30, 2021) https://www.wsj.com/finance/investing/investors-
rethink-china-bets-after-beijing-crackdown-triggers-stock-market-rout-11627669954 (Exhibit
14).
Note: The Wall Street Journal article, now behind a pay wall, indicated that investors in
general lost $400 billion, not just pension funds. By July of 2023, Asia Financial stated
“Chinese technology giants have lost more than $1 trillion in value.” “Beijing’s Crackdown
Wiped $1.1 Trillion Off Chinese Big Tech” (July 12, 2023)
https://www.asiafinancial.com/beijings-crackdown-wiped-1-1-trillion-off-chinese-big-tech . - Liu, Y., “Explainer: China and US’ Accounting Standards – Key Differences” (January 22,
2021) https://equalocean.com/analysis/2021062216383 (Exhibit 15). - The Chinese Communist Party presides over one of the most brutal regimes in history. It
is estimated the Party has killed 80 million Chinese, not to mention requiring 330 million
forced abortions.. https://www.foxnews.com/world/china-celebrates-centenary-of-communist-
party-that-killed-tens-of-millions ; https://www.ft.com/content/6724580a-8d64-11e2-82d2-
00144feabdc0 (Exhibit 16).The Party has placed more than 1 million Uigurs (Muslims) into
concentration camps and placed a half million Uigur men into slave labor picking cotton.
https://www.newsweek.com/more-half-million-uighurs-forced-pick-cotton-china-report-alleges-
1554960 (Exhibit 17). Rape is a tool used to control Uigur women in the camps.
https://www.voanews.com/south-central-asia/china-uses-rape-torture-tactic-against-uighur-
detainees-victims-say . (Exhibit 18). The Party also persecutes Tibetans, Muslims, Falun
Gong and Christians. See https://tibet.net/chinas-pervasive-control-and-suppression-of-
tibetan-buddhism-continued-in-2020-us-religious-freedom-commission/ (Exhibit 19);
https://www.uscirf.gov/sites/default/files/2021-04/2021%20Annual%20Report.pdf (excerpt)
(Exhibit 20) . https://www.persecution.org/wp-
content/uploads/2020/07/071720_icc_china_report.pdf (Exhibit 21). - Iowa Republican Platform 2024 excerpt.
https://assets.nationbuilder.com/iowagop/pages/10/attachments/original/1716481324/2024_Io
wa_Republican_Platform_FINAL-FINAL.pdf?1716481324 (Exhibit 22).
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