over facilitating investments in Chinese firmsflagged by US for security concerns
By Max Adams
Aug 1, 2023
The House Select Committee on the Chinese Communist Party sent a letter to BlackRock and MSCI over China investments, per the WSJ. Getty Images
BlackRock and MSCI are facing a probe from lawmakers in Congress over the asset manager and the index provider's roles in funneling American investments into shares of Chinese firms that have been flagged by the US over security concerns or human rights abuses, the Wall Street Journal reported on Tuesday.
Per the Journal, the House Select Committee on the Chinese Communist Party is seeking facts that will help determine the US's approach to China policy, including investment flows into the country.
A letter sent by the committee and seen by the WSJ states that the firms are "exacerbating an already significant national-security threat and undermining American values" by helping route American investment money into Chinese companies with security and human rights risks.
According to the letter, stocks in some of BlackRock's funds or MSCI's emerging markets indexes include those of companies on US "red flag lists," some of which have helped advance Chinese military interests or have been involved in abuses in the China's Xinjiang region, where most of the country's Uyghur population is located.
The congressional panel said it found that American investors have funded 60 such companies and BlackRock has invested $429 million through five of its funds.
In a statement to Insider, BlackRock said:
"Like many global asset managers, BlackRock offers our clients a number of strategies to invest in or exclude China from their portfolios. The majority of our clients' investments in China are through index funds, and we are one of 16 asset managers currently offering US index funds investing in Chinese companies. With all investments in China and markets around the world, BlackRock complies with all applicable US government laws. We will continue engaging with the Select Committee directly on the issues raised."
MSCI said it is reviewing the inquiry from the House panel on China.
US-China relations are at a tense crossroads as the two superpowers trade economic blows and ratchet up military posturing. The US has throttled China's access to key chip components that it says could power military hardware, while China recently has restricted the export of many metals used in semiconductor manufacturing.