Texas TRS Faces Backlash for Continued Chinese Investments Despite Statewide Divestment Order
The Teacher Retirement System of Texas (TRS) is facing growing scrutiny for continuing to invest in Chinese companies, despite a statewide divestment order issued by Governor Greg Abbott in November 2024. While TRS claims to have shed all direct investments in China and Hong Kong, records show that the pension fund still holds significant indirect investments through commingled funds. Critics argue this defies the governor’s directive and raises serious questions about transparency and accountability.
TRS, which manages billions in retirement funds for Texas educators, reported $133.5 million in direct investments in Chinese companies as of December 31, 2024. Following Abbott’s order, TRS announced in January 2025 that it had divested all direct holdings in China, except for those suspended by regulators or classified as non-traded. The agency also adjusted its strategic asset allocation to exclude China and Hong Kong.
However, a closer look at TRS records reveals that the fund has continued to engage in proxy votes for Chinese companies, including some new investments made in 2025. These proxy votes, which allow shareholders to influence company decisions, included stakes in over 10 Chinese firms. Among these are companies linked to the Chinese Communist Party (CCP) and China’s military-industrial complex.
TRS spokespersons have acknowledged that the fund still holds indirect investments in China through commingled funds, where TRS is one of many investors. Unlike direct investments, these pooled funds make it difficult to exclude specific companies. A TRS representative explained that while the fund can instruct managers on how to vote in these funds, it lacks direct control over the specific stocks included.
“Where TRS has the ability to instruct the manager how to vote shares in commingled funds, we do instruct them according to our proxy policy,” a TRS spokesperson said. But this explanation has not satisfied critics.
One of the most vocal opponents of TRS’s ongoing Chinese investments is Dr. Marty Lenard, a fine arts director at New Braunfels ISD and a candidate for the TRS Board. “It is very interesting why there would be new companies that TRS would have proxy votes for,” Lenard stated, expressing surprise that the fund would continue to invest in Chinese companies despite the divestment order.
Governor Abbott’s office has not provided a clear answer on whether his divestment order applies solely to direct investments or if it also extends to indirect holdings through commingled funds. TRS has declined to disclose the total value of its indirect Chinese investments, citing an exception in the Texas Public Information Act that allows it to withhold “certain investment information.” Critics argue that this secrecy undermines the state’s commitment to transparency.
Attorney Tony McDonald, a Fort Worth-based legal expert, emphasized that TRS is choosing to withhold this information. “Just because the Public Information Act permits a governmental body to withhold records does not absolve them of their choice to hide the information from Texans,” McDonald said.
The debate over TRS’s investments comes at a time when national security experts continue to warn of the risks associated with supporting Chinese firms. The U.S. Intelligence Community’s 2025 Annual Threat Assessment identified China as the “central threat of our times,” citing its use of economic leverage and technology to undermine American interests.
Some of the Chinese firms included in TRS’s recent proxy votes are directly tied to the CCP. For example, Poly Property Services, a Hong Kong-based real estate firm, boasts that 31 percent of its employees are CCP members. Another investment, Xinte Energy, has been flagged for potential involvement in China’s Uyghur slave labor camps. The company has also been linked to the CCP’s aggressive push for global dominance in renewable energy.
State lawmakers are now weighing new measures to force full transparency in state pension fund investments. Senate Bill 667, introduced by State Senator Bryan Hughes, aims to ban all state government entities from investing in “certain Chinese-affiliated entities.” Supporters argue that the bill would enhance Texas’s economic sovereignty and ensure that taxpayer funds are not used to support foreign adversaries.
Meanwhile, Governor Abbott is expected to appoint two new members to the TRS Board this year. The list of candidates includes Dr. Marty Lenard, Dr. Ismael Gonzalez III, and Dr. Pete Pape. Lenard has already expressed strong opposition to investing in Chinese companies, while Gonzalez and Pape have yet to make their positions clear.
As the debate continues, Texas educators and retirees are left wondering whether their retirement funds are being used to support a foreign power widely viewed as a threat to U.S. national security. The final decision on TRS’s investment policies may rest with its new board members and with state lawmakers who are pushing for stronger divestment laws.
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