In 1968, Capital International published indexes covering the global stock market for non-U.S. markets. In 1986, Morgan Stanley licensed the rights to the indexes from Capital International and branded the indexes as the Morgan Stanley Capital International (MSCI) indexes. By the 1980s, the MSCI indexes were the primary benchmark indexes outside of the U.S. Today, when an emerging market is added into an MSCI index, it would create global demand toward the stock shares of the emerging market due to buying by passive stock-index funds or institutional investors who are benchmarked to the index. Thus, the shares of the newly included emerging market often enjoy price appreciation. In 2018 MSCI announced it would begin including mainland Chinese "A" shares in its Emerging Markets Index. Initially the domestic Chinese companies received a 5% weighting in the index even though the stated methodology called for a 40% weighting. While MSCI is the last major index provider to include the companies, the decision has proved controversial due to the fact that many Chinese listed companies refuse to permit the Public Company Accounting Oversight Board to inspect their financial records, thereby sparking criticism and questions from Senator Marco Rubio and others. In February 2019, The Wall Street Journal reported that the index inclusion decision was the result of pressure from the Chinese government. In March 2019, CNBC reported that MSCI would quadruple the weightings of mainland Chinese shares in its global benchmarks. In April 2020, it was reported that Donald Trump was considering an executive action to prohibit the Thrift Savings Plan from transferring $50 billion to mirror the MSCI All Country World Index fund. The Thrift Savings Plan (TSP) is a defined contribution plan for United States civil service employees and retirees as well as for members of the uniformed services. The TSP is the largest defined contribution plan in the world. The TSP is administered by the Federal Retirement Thrift Investment Board, an independent agency. The TSP is one of three components of the Federal Employees Retirement System (FERS; the others being the FERS annuity and Social Security).

1. Please discuss the effects of the index inclusion decision in 2018 and the weighting increase decision in 2019 on Chinas balance-of-payments data? Specifically, do these decisions have any impacts on Chinas current account? Do these decisions have any impacts on Chinas capital account? Do these decisions have any impacts on Chinas foreign reserve account?

2. Would these decisions increase or decrease demand for Yuan in the FX market. Do these decisions have any implications on the value (exchange rate) of Yuan?

3. Please discuss the possible reasons/rationales why the Trump administration would consider such an executive action.