America’s largest public pension fund has tapped a manager of China’s predatory investment fund as its next chief investment officer.

The California Public Employees’ Retirement System, which manages $360 billion and is frequently described as the most influential pension fund investor in the U.S., has asked Ben Meng to take over the top investment job when its current chief departs at the end of the year, the Wall Street Journal reported Wednesday.

In the Wall Street Journal’s report, Meng is described as an official of the State Administration of Foreign Exchange, China’s foreign-exchange and currency regulator. His job, however, is not writing regulations or supervising Chinese companies’ foreign exchange reporting.

Meng, a former Wall Street bond trader, is a deputy chief investment officer of SAFE. This suggests his job was to invest the assets of SAFE, which is not just a regulator but also one of the world’s biggest sovereign wealth funds. SAFE manages over $3 trillion of China’s foreign reserves.

What is China’s SAFE?

China is a closed economy, which means foreign currency flows are tightly controlled. When a Chinese company receives dollars by exporting goods to the United States, it is required to exchange them for China’s domestic currency. The local bank making the exchange turns the dollars over to the People’s Bank of China, the equivalent of China’s Federal Reserve.

The PBOC then turns the dollars over to SAFE, which is charged with investing the funds to further China’s strategic and economic goals. In the past, this mainly involved buying ultra-safe U.S. assets such as Treasuries and bonds backed by U.S. government-sponsored entities. But in recent times China’s investment strategy shifted to investing in technology and supporting China’s One Belt One Road schemes.

An investigation by the U.S. government into China’s actions with respect to U.S. technology found that Chinese investment strategy is significantly “driven by non-market factors. These factors stem from the Chinese government’s extensive intervention – in the Chinese economy in general, and in foreign investment in particular – to achieve industrial policy objectives.”

That investigation led the Trump administration to begin imposing tariffs on China’s exports.

Those objectives were described in a 2016 report by the Mercator Institute for China Studies, a leading German think tank, which found:

[To] speed up China’s technological catch-up and to leapfrog stages of technological development, Chinese companies are acquiring core technologies through investment abroad. In itself, this is neither surprising nor objectionable. However, China’s technology acquisitions are partly supported and guided by the state. China pursues an outbound industrial policy with government capital and highly opaque investor networks to facilitate high-tech acquisitions abroad. This undermines the principles of fair competition: China’s state-led economic system is exploiting the openness of market economies in Europe and the United States. Chinese high-tech investments need to be interpreted as building blocks of an overarching political programme. It aims to systematically acquire cutting-edge technology and generate large-scale technology transfer.

SAFE’s investment activities are closely held secrets. Indeed, for the first few years of its existence, SAFE’s investment arm itself was a secret. But by virtue of its regulatory role—which gives it screening and approval authority over outgoing private investment in China—it has insights into global financial transactions that are likely unparelled by any investor in the world. It is widely believed that China’s recent crack-down on certain types of foreign investment was aimed at strengthening the role of SAFE and other Chinese government agencies in directing funds toward the state’s preferred targets.

Here’s how the Mercator report described the activities of China’s sovereign investment funds:

Sovereign investment funds and governmental investment management companies play an increasing role in high-tech FDI. While these funds and their management often present themselves as private enterprises, the state’s active role is concealed behind an opaque network of ownership and funding structures. The State Council and local governments primarily use these funds and the expertise of private managers to make subsidies to Chinese enterprises more efficient. These funds are now becoming increasingly active with regard to investment in overseas markets.

A report issued this year by Baker McKenzie described the recent shift of Chinese outward investment toward state-backed entities:

Just a few years ago, a handful of private companies including HNA, Wanda, Fosun and Anbang were responsible for more than 25% of the total value of Chinese deals targeting assets in Europe and North America. But since the Chinese government began placing greater restrictions on outbound investment in late 2016, this group of investors has taken a backseat to sovereign wealth funds and state-owned players with missions to advance China’s development strategies such as the Belt and Road Initiative. But since the Chinese government began placing greater restrictions on outbound investment in late 2016, this group of investors has taken a backseat to sovereign wealth funds and state-owned players with missions to advance China’s development strategies such as the Belt and Road Initiative.

The Mysterious Meng

This change in approach closely followed Meng’s move to SAFE in 2015.

Exactly what role Meng has played as SAFE deputy chief investment officer is unclear, in large part because almost everything about SAFE is concealed behind a China Wall of secrecy. CalPERS did not respond to a request for more information about Meng, who managed a multi-million portfolio of assets for the pension fund before he went to SAFE.

After Breitbart News reported on CalPERS selection of Meng, he contacted the Wall Street Journal to say that he is a U.S. citizen who was a “foreign contractor” to SAFE.

Given the size and influence of CalPERS, it is likely that U.S. and California authorities will have questions about Meng’s role at SAFE and the reasons for his selection. CalPERS silence so far is unlikely to pass muster. The U.S. doesn’t typically allow for state pension funds to operate in SAFE like secrecy.