North Dakota lawmakers debate China investment strategy amid tariff concerns

North Dakota's Senate Appropriations Committee convened on April 4, 2025, to discuss critical investment strategies that could significantly impact the state's economy. A key focus of the meeting was the potential divestment from Chinese investments, which could result in substantial financial implications for the state's legacy fund.

During the session, concerns were raised about China's recent decision to impose a 35% tariff on U.S. agricultural products, particularly soybeans, which are a major export for North Dakota farmers. This tariff could jeopardize the state's agricultural economy, prompting discussions on how to navigate the complex relationship with China while safeguarding local interests.

Jody Smith, the interim executive director for the retirement and investment office, highlighted the challenges posed by a proposed bill that initially called for a $6 billion divestment from various investments, including major companies like Apple and Ford. After amendments, the focus shifted to a more manageable divestment of approximately $22 million from direct investments in China. Smith emphasized that divesting from these investments could lead to lower returns for the legacy fund, which currently enjoys a 40% return rate from its Chinese investments.

The committee also discussed the importance of maintaining flexibility in investment strategies, particularly in light of the rapidly changing geopolitical landscape. A sunset clause was introduced to ensure that the legislature could revisit the decision on Chinese investments in future sessions, acknowledging that relationships with countries can evolve.

Additionally, the committee explored opportunities for in-state investments, with a focus on infrastructure projects and partnerships with local financial institutions. The state has been authorized to invest up to $1.3 billion in North Dakota, but current policies limit individual investments to $25 million.

As the meeting concluded, the committee underscored the need for a balanced approach that considers both ethical implications and financial returns. The discussions set the stage for future legislative actions that could reshape North Dakota's investment landscape and its economic ties with global partners.