WASHINGTON (Reuters) - The Trump administration is “looking at” investments in Chinese military companies by the California Public Employees’ Retirement System (CalPERS), U.S. national security adviser Robert O’Brien said on Wednesday.

FILE PHOTO: A sign at California Public Employees' Retirement System (CalPERS) headquarters in Sacramento, California, U.S. February 14, 2017. REUTERS/Max Whittaker/File Photo

O’Brien’s comments come amid tensions between the United States and China over a host of issues running from disputes over trade and U.S. charges of massive Chinese espionage to Beijing’s defense build up and its establishment of military outposts on disputed islands in the South China Sea.

“It’s something we are looking at,” O’Brien responded when asked at the conservative Heritage Foundation thinktank if the federal government could examine CalPERS’ investments in Chinese defense firms. “It’s an issue of security for American investors.”

The California state executive agency is the largest U.S. public pension fund. It manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families. A CalPERS representative did not immediately return a request for comment.

“Some of the CalPERS investment policies are incredibly concerning,” O’Brien said. “We’ve got folks who are going to rely on their pension for their retirement and putting those investments into companies that don’t have GAAP accounting and they don’t have the same reporting requirements that American companies do is scary.”

“If someone told me I had to invest my 401(k) in Chinese state-owned enterprises or partially state-owned enterprises, where they don’t follow the generally accepted accounting principles and they don’t have to report to independent regulatory bodies, I’d be pretty worried about that,” he continued.

“It’s something we are taking a look at and it’s concerning and, moreover, OK, why are we sending American capital to a country and supporting a defense industry that is popping out a couple of destroyers and frigates a month and threatening to have total over-mass against us in the Indo-Pacific,” O’Brien said.

Last month, U.S. Representative Jim Banks urged California to fire the fund’s chief investment officer, Yu Ben Meng, citing what he called the official’s “long and cozy” relationship with Beijing. Banks also assailed the fund’s investments in Chinese firms.

A U.S. citizen born in China, Meng has twice worked for CalPERS, the first time starting in 2008 and the second time beginning in January 2019 when he became CIO managing $400 billion in investments, according to the CalPERS website.

CalPERS CEO Marcie Frost defended Meng in a statement.

“This is a reprehensible attack on a U.S. citizen. We fully stand behind our chief investment officer who came to CalPERS with a stellar international reputation,” she said.