Relating to prohibiting certain state governmental entities from investing in certain Chinese-affiliated entities.

89th Legislature (2025) Introduced by Jeff Barry and 2 co-sponsors

Texas prohibits state entities from investing in Chinese government-affiliated companies, restricting billions in pension and endowment fund investments effective September 2025.

Effective on 9/1/25

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Legislative bill overview

SB 667 prohibits Texas state governmental entities, including public pension funds, endowments, and investment accounts, from investing in companies affiliated with or controlled by the Chinese government. The bill takes effect September 1, 2025, and applies to future investments while allowing existing holdings to be divested over a reasonable timeline.

Why is this important

This legislation directly affects billions of dollars in public retirement and education funds managed by Texas entities like the Teacher Retirement System and university endowments. The restrictions reshape investment strategy by excluding a major economic sector, potentially impacting returns, portfolio diversification, and fund performance that Texans rely on for retirement security and educational resources.

Potential points of contention

Defining "Chinese-affiliated": The bill requires clear definitions of what constitutes Chinese government control or affiliation, which can be ambiguous for complex corporate structures and joint ventures, creating implementation challenges and litigation risk.

Financial impact on returns: Excluding Chinese companies and sectors may limit diversification and competitive returns, potentially costing pension funds millions in foregone gains over decades, ultimately affecting retiree benefits and education funding.

Reciprocal trade/diplomatic consequences: China may respond with restrictions on Texas businesses or agricultural exports, creating economic tensions that could harm the state's economy beyond the investment restrictions themselves.