China Financial Threats to U.S. Retiree Savings

Bipartisan Concerns Over Chinese Practices

Lawmakers from both the House and Senate convened for a rare joint hearing this week to confront the growing financial threats posed by China to American retirement savings. The session, a collaboration between the House Select Committee on the Chinese Communist Party and the Senate Special Committee on Aging, spotlighted predatory practices that jeopardize the economic security of U.S. retirees.

Experts and legislators voiced alarm over China's escalating financial aggression, particularly through sophisticated scams targeting older Americans. These schemes, often orchestrated by Chinese criminal networks, not only drain personal savings but also pose a broader risk to national security by exploiting vulnerabilities in the U.S. financial system.

Exploitation of U.S. Capital Markets

A key focus of the hearing was China's exploitation of American capital markets. Sen. Rick Scott, chairman of the Senate Committee on Aging, delivered a sobering warning during his opening remarks: 'If you have your retirement invested in anything controlled by or under the jurisdiction of the Chinese Communist Party, you are at risk of losing every dollar—and this could happen overnight.' His statement underscored the urgency of addressing these vulnerabilities.

The discussion highlighted ongoing violations of the Holding Foreign Companies Accountable Act, enacted in 2020 under President Donald Trump. This law mandates that foreign companies failing to meet U.S. auditing standards for three consecutive years be delisted from U.S. stock exchanges. Despite this, major Chinese firms like Alibaba, Baidu, and Yum China continue to trade, flouting compliance requirements. Rep. John Moolenaar emphasized the deliberate infiltration by the Chinese Communist Party (CCP), citing the 2021 collapse of China’s private education sector as a stark example—where sudden regulations erased billions in U.S. investments overnight.

Rise of Pig Butchering Scams

The hearing also addressed the surge in 'pig butchering' scams, a term coined for schemes where victims are gradually lured into fake investment opportunities before scammers vanish with their money. Sen. Kirsten Gillibrand, ranking member of the Senate Special Committee on Aging, described the predatory nature of these scams: 'They are looking at our seniors like animals that they are fattening for slaughter.' The FBI reported that Americans over 60 lost more than $3.4 billion to such frauds in 2023 alone.

Rep. Raja Krishnamoorthi detailed how Chinese gangs, primarily based in Southeast Asia, generate nearly $44 billion annually through these cyber scams. Brady Finta, a former FBI agent and founder of the National Elder Fraud Coordination Center, testified that only 10 to 15 percent of victims report these crimes, and stated 'Even with this low percentage, the volume of complaints is still too large to investigate.'

TikTok and National Security Risks

Entrepreneur Kevin O’Leary, a prominent witness, labeled TikTok 'weapons-grade spyware' and criticized the lack of economic reciprocity with China. He pointed to the CCP’s use of 'golden shares'—small stakes granting significant control—in companies like TikTok, where Chinese leader Xi Jinping reportedly holds influence. O’Leary, who offered $20 billion to buy the platform in January, stressed that its fate hinges on negotiations between President Trump and Xi.

President Trump recently extended TikTok’s divestiture deadline from its parent company ByteDance by 75 days, hinting at using tariffs as leverage. He stated on Truth Social, 'My Administration has been working very hard on a Deal to SAVE TIKTOK, and we have made tremendous progress.' The app’s future remains uncertain amid persistent security concerns tied to CCP oversight.

Wall Street’s Role in Funding China

The hearing scrutinized Wall Street’s complicity in channeling American savings into Chinese firms. Chris Iacovella, president of the American Securities Association, explained that for over two decades, investment banks have profited by promoting Chinese companies on U.S. exchanges, often through passive index funds. Bloomberg data from 2023 shows over 2,000 U.S. mutual and exchange-traded funds hold $294 billion in Chinese stocks and bonds.

Iacovella warned that these investments often support entities linked to the Chinese military, with many Americans unknowingly funding CCP activities. He urged Congress to ban such investments, a call echoed by Sen. Scott, who noted several legislative proposals aimed at enhancing transparency and protecting vulnerable investors, especially seniors.