State board discusses divestiture from $22M Chinese investments amid portfolio concerns

A significant discussion unfolded during the North Dakota Senate Appropriations meeting on April 7, 2025, focusing on proposed legislation aimed at divesting state investments from Chinese-affiliated businesses. The bill, as presented, mandates the state to withdraw approximately $22 million from direct investments in China, a move that officials believe will not adversely affect the overall returns of the state’s investment portfolio.

Key points highlighted during the meeting included the distinction between direct investments and commingled funds. While the bill requires divestment from direct investments, it allows the state to maintain its position in commingled funds that include Chinese investments. Currently, these commingled funds represent about $640 million, or roughly 2% of the total investment portfolio, which stood at $12 billion at the beginning of the week.

Officials acknowledged the complexities of divesting entirely from Chinese investments, noting that while the state can choose to divest from direct investments, doing so from commingled funds could be costly and challenging. One investment in particular has yielded a remarkable 40% return over the past year, raising concerns about the potential financial impact of divestment.

The discussion also touched on the broader implications of the relationship with China, particularly in agriculture, where China remains a key customer for North Dakota's soybean exports. Legislators expressed caution about the potential fallout from severing ties with such an important trading partner.

As the meeting concluded, it was clear that while the state is moving towards divesting from direct investments in China, the path forward remains complex, with ongoing discussions about the best strategies to balance financial returns and geopolitical considerations. The legislation is expected to be refined further as lawmakers continue to navigate these critical issues.