BlackRock Investing in Blacklisted Communist Chinese-Tied Firms, Faces Congressional Probe

Using OUR retirement funds to fuel Chinese firms the U.S. has flagged over security and human-rights issues, lawmakers say.

Elon is right. Mass class action suit time.

A U.S. congressional committee on China said asset management giant BlackRock (BLK.N) and index provider MSCI (MSCI.N) were facilitating investments into blacklisted Chinese companies. The firms have facilitated American capital flow into the companies the U.S. government had found guilty of fueling China’s military advancement or human rights abuses, the House of Representatives’ Select Committee on the Chinese Communist Party (CCP) said on Monday.

Related: Elon Musk Describes ESG as “Communism Rebranded”

BlackRock, MSCI Face Congressional Probes for Facilitating China Investments

By: The Wall Street Journal,  01 Aug 2023:

Americans’ retirement funds are unwittingly fueling Chinese firms the U.S. has flagged over security and human-rights issues, lawmakers say

The world’s largest asset manager and a top stock-market-index compiler are being investigated by a congressional committee for facilitating American investment in Chinese companies the U.S. government has accused of bolstering China’s military and violating human rights.

The House of Representatives’ Select Committee on the Chinese Communist Party notified BlackRock and MSCI on Monday of the probes into their activities, according to letters viewed by The Wall Street Journal.

While the committee doesn’t have lawmaking authority, it does have subpoena powers and has garnered bipartisan support for its initiatives. The goal of the investigation is to gather facts that would inform the U.S.’s China policies, including on American capital flows.

The panel told the firms that a review of just a sliver of their activities—which aren’t illegal—showed that they are causing Americans to fund more than 60 Chinese companies that U.S. agencies have flagged on security or human-rights grounds.

By routing “massive flows of American capital” to such Chinese entities, the U.S. firms are “exacerbating an already significant national-security threat and undermining American values,” said the letters, signed by the panel’s chairman, Republican Rep. Mike Gallagher of Wisconsin, and its top Democrat, Rep. Raja Krishnamoorthi of Illinois. Across five funds, BlackRock has invested more than $429 million in such Chinese companies, the panel found.

BlackRock manages more than $9 trillion in assets and is entrusted by millions of Americans to invest their savings. The firm said in a statement that it has engaged the committee directly to better understand its concerns. “The majority of our clients’ investments in China are through index funds, and we are one of 16 asset managers currently offering U.S. index funds investing in Chinese companies,” it added.

MSCI selects the securities that make up the indexes many investors use as a basis for their portfolios. There are more than $13 trillion of assets benchmarked to MSCI’s products. In a statement, the firm said it’s reviewing the committee’s inquiry. It has previously said that all of its index decisions are made after consultations with a range of global market participants.

The select committee on China, which was set up this year, is increasingly targeting the role of U.S. companies and financial institutions in fueling the rise of China. Its work exemplifies a shift in thinking in the White House and on Capitol Hill that once supported U.S. business ties with China but now sees some investment as counter to U.S. interests.

Like the Jan. 6 select committee that investigated the 2021 attack on the Capitol, the China panel aims to build a narrative in a way that is accessible to the public.

Last week, the Senate made progress on passing potential legislation that would require certain U.S. entities to notify the Treasury Department of investments in sensitive technologies in adversary countries such as China. Lobbying from the business community has so far quashed attempts to review or block such investments.

The China committee in Julylaunched an investigation into U.S. venture-capital firms funding Chinese artificial-intelligence, semiconductor and quantum-computing startups.

The White House and a bipartisan coalition in Congress have deemed such investments especially harmful because of the operational expertise and critical relationships the U.S. venture capitalists offer their targets.

With this latest investigation into BlackRock and MSCI, the panel is broadening its focus by now also scrutinizing asset managers and index compilers. Such firms would typically have little to no direct involvement with the Chinese companies in their portfolios or indexes, but they play a crucial role in directing large sums of Americans’ retirement savings into their coffers. The panel said its review has shown that, “as a direct result of decisions” made by BlackRock and MSCI, Americans have been “unwittingly funding” an array of Chinese companies that operate against the interests of the U.S.

A representative from the Chinese Embassy in Washington said Monday that “politicizing economic, trade and investment issues runs counter to the principles of market economy.”

Buying shares of Chinese companies has provided big returns in the past for investors. The optics of such investments have shifted, however, as U.S.-China tensions have escalated.

In 2018, MSCI added domestic Chinese stocks to its widely followed Emerging Markets Index, sending billions of dollars flowing into those companies. The move came after pressure from the Chinese government, the Journal previously reported.

In addition to its passive funds invested in Chinese companies, two years ago BlackRock raised money for a Chinese mutual fund. That decision drew scrutiny from billionaire investor and political activist George Soros, who at the time said pouring money into Chinese companies would likely lose money for BlackRock clients and damage U.S. national-security interests.

The committee, in its letters, called out BlackRock and MSCI for including in its funds or indexes companies featured on various U.S. government “red flag lists,” such as a Pentagon list of Chinese companies operating in the U.S. that help China’s military and a Department of Homeland Security list of entities involved in human-rights abuses in China’s Xinjiang region.

It criticized the U.S. firms for investing in or including in indexes companies such as Chinese telecommunications giant ZTE, which the Federal Communications Commission has put on a list of national-security threats, and units of Aviation Industry Corporation China, a state-owned company known as AVIC that makes jet fighters for the People’s Liberation Army.

Representatives from AVIC and ZTE didn’t respond to requests for comment.

In its letters, the committee asked each firm to make a full accounting of the Chinese entities it is investing in or including on indexes, and to report any due diligence it undertakes before doing so.

The Truth Must be Told

Your contribution supports independent journalism

Please take a moment to consider this. Now, more than ever, people are reading Geller Report for news they won't get anywhere else. But advertising revenues have all but disappeared. Google Adsense is the online advertising monopoly and they have banned us. Social media giants like Facebook and Twitter have blocked and shadow-banned our accounts. But we won't put up a paywall. Because never has the free world needed independent journalism more.

Everyone who reads our reporting knows the Geller Report covers the news the media won't. We cannot do our ground-breaking report without your support. We must continue to report on the global jihad and the left's war on freedom. Our readers’ contributions make that possible.

Geller Report's independent, investigative journalism takes a lot of time, money and hard work to produce. But we do it because we believe our work is critical in the fight for freedom and because it is your fight, too.

Please contribute here.

or

Make a monthly commitment to support The Geller Report – choose the option that suits you best.

• $25.00 here
• $50.00 here
• $75.00 here
• $100.00 here
• $250.00 here

5 1 vote

Article Rating

2 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments

Snowedin

8 months ago

Nothing will be done since Blackrock has their hands in the pockets of too many corrupt politicians.

3

WhiteySupreme

8 months ago

They’ll just fine the crap outta them to generate some money for drag queen story time. Nobodies going to jail.

0