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Texas Gov. Greg Abbott gives his state of the state address on Feb. 1, 2021 in Lockhart, Texas. (Bob Daemmrich/Pool Photo via AP) Texas Gov. Greg Abbott gives his state of the state address on Feb. 1, 2021 in Lockhart, Texas. (Bob Daemmrich/Pool Photo via AP)

Texas Gov. Greg Abbott gives his state of the state address on Feb. 1, 2021 in Lockhart, Texas. (Bob Daemmrich/Pool Photo via AP)

Tom Kertscher
By Tom Kertscher February 24, 2022

In primary for Texas governor, a misleading claim about Greg Abbott and investing tax money in China

If Your Time is short

  • The governor is not directly investing Texas tax dollars in Chinese companies.

  • The attack on Abbott, from a rival in the GOP primary for governor, alludes to investments made by Texas’ public pension systems.

  • The governor appoints board members to oversee the systems, which are supported by tax dollars and employee contributions. But investment decisions are made by the systems themselves.

GOP Texas Gov. Greg Abbott has called China a hostile nation. He’s accused it of "causing the disaster" of the COVID-19 pandemic.

Is Abbott also investing state tax money in Chinese companies?

That’s the claim from Don Huffines, one of the Republican gubernatorial candidates challenging Abbott in the state’s March 1 primary.

"Under Greg Abbott’s leadership, Texas is putting taxpayer dollars into Chinese companies," Huffines declared in an ad on Facebook and Instagram.

Abbott is not directly investing tax money in Chinese companies. 

Huffines’ claim alludes to investments in Chinese companies made by the state’s public pension systems. Those systems are funded in part with tax dollars, but their investments are not directly managed by the governor or his appointees.

How the governor’s race shapes up

Huffines is a Dallas businessman and former Texas state lawmaker. Abbott is seeking his third four-year term as governor. 

The Democratic primary, whose candidates include former U.S. Rep. Beto O’Rourke, is also contested.

Overall, the race has been sized up by campaign watchers as likely or solid Republican.

What Huffines’ claim refers to

Huffines’ ad links to a February 2022 story from the San Antonio Express-News. The story reported that $9.12 billion is invested in companies in China through Texas’ seven public pension funds.

The story indicated that the responsibility for investment choices is not primarily Abbott’s. 

It said that generally, "there’s a dividing line between decisions made by politicians and those made by the pension money managers," though the Texas Legislature has ordered pension funds to divest from companies that boycott Israel, from Sudanese and Iranian companies, and from those of other nations believed to sponsor terrorism.

The governor’s limited role

"The Texas governor has absolutely no direct impact on the specific investment choices of any of the pension funds," said John Diamond, director of the Center for Public Finance at Rice’s Baker Institute for Public Policy.

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The role is limited to oversight.

With the advice and consent of the state Senate, the governor appoints the members of the Texas State Pension Review Board, which oversees all Texas public retirement systems. The governor also appoints nearly all board members of the pension systems.

There are, in turn, a number of layers between the governor and the people who make the investment decisions for the seven systems.

For example, the Texas County & District Retirement System has a board appointed by the governor, with the advice and consent of the state Senate, that sets investment policy. But an executive director and staff run the day-to-day operations; and the system hires private consultants who in turn advise on selecting professional managers, such as JP Morgan, to manage various investment portfolios within the system. 

The investment funds come from contributions made by government employees and the employers, such as individual county governments. For example, the Teacher Retirement System is funded by 8% employee contributions and 8.87% employer contributions, which are from taxpayer funds. 

In March 2021, the Pensions & Investments trade publication reported that the Texas County & District Retirement System committed $40 million to a Beijing-based manager to be split between two China-focused private equity/venture capital funds. The two funds focus on early-stage and growth-stage Chinese technology companies.

"It seems extremely unlikely that Governor Abbott is personally directing any of the investment choices of the various Texas state and local pension funds. Extremely unlikely," said economics professor Dennis Jansen, director of the Private Enterprise Research Center at Texas A&M University.

Anyone investing in a passive world index fund, such as Vanguard’s Total International Stock fund, is investing partly in China, or in many international funds, Jansen added. 

"It is not as if China is a small part of the global economy. Having appropriate diversification across industries and countries is well-established investment advice," he said.

The Huffines and Abbott campaigns did not respond to our requests for comment.

Our ruling

Huffines said in an ad: "Under Greg Abbott’s leadership, Texas is putting taxpayer dollars into Chinese companies."

Texas public pension funds, which include taxpayer money, have invested in Chinese companies.

But Huffines' use of the word "leadership" suggests Abbott is directly leading the investment decisions. He is not doing that, Abbott’s role is limited. The governor appoints the boards that oversee the public pension systems, and the day-to-day investment decisions are made by the systems, not Abbott. 

Huffines’ statement contains an element of truth but ignores critical facts that would give a different impression. That’s our definition of Mostly False.

Our Sources

Facebook, Don Huffines ad on Greg Abbott and China, Feb. 10, 2022 to Feb. 11, 2022

San Antonio Express-News, "Texas invests over $9 billion in China despite ‘hostile nation’ rhetoric from GOP leaders," Feb. 10, 2022; updated Feb. 12, 2022 

Texas A&M University Private Enterprise Research Center, "Texas Pension Woes," April 2021

Email, economics professor Dennis Jansen, director of the Private Enterprise Research Center at Texas A&M University, Feb. 22, 2022

Email, John Diamond, director of the Center for Public Finance at Rice’s Baker Institute for Public Policy, Feb. 21, 2022

Pensions & Investments, "Texas County & District commits $40 million to China-focused funds," March 17, 2021

Texas statutes, "Teacher Retirement System Of Texas," accessed Feb. 22, 2022

Employees Retirement System of Texas, "ERS Trustees," accessed Feb. 22, 2022

Texas Municipal Retirement System, "Trustees," accessed Feb. 22, 2022

Texas Emergency Services Retirement System, "Board of Trustees," accessed Feb. 22, 2022

Texas County & District Retirement System, "Strength in Numbers," accessed Feb. 22, 2022

Texas County & District Retirement System, "Executive Leadership," accessed Feb. 22, 2022

Texas County & District Retirement System, "TCDRS Investment Managers," accessed Feb. 22, 2022

Texas County & District Retirement System, "TCDRS Investment Policy," Dec. 2, 2021

Texas County & District Retirement System, "Our Oversight & Guidance," accessed Feb. 22, 2022

Texas County & District Retirement System, "TCDRS Funding Policy," June 25, 2015

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In primary for Texas governor, a misleading claim about Greg Abbott and investing tax money in China

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