US Committee Probes BlackRock’s Investment In Chinese Companies With $429 Million

Key Points:

• US Committee probes BlackRock and MSCI over China investments.
• Blacklisted Chinese firms allegedly received over $429 million.
• Tensions rise amid concerns over national security and human rights.

In a bid to shed light on the ties between US investment giants and blacklisted Chinese companies, the US House of Representatives Select Committee on the Chinese Communist Party (CCP) has launched an investigation into BlackRock and MSCI, according to Reuters.

The committee has accused these asset management firms of facilitating the flow of American capital into companies that have been blacklisted by the US government for their involvement in human rights abuses and support of China’s military endeavors.

The investigation comes as tensions between the US and China continue to reverberate throughout the corporate world, highlighting the complexities of economic relations between the two global powers. The committee’s goal is to gain insights that could inform future US policies regarding capital flows into China.

According to the letters dated Monday, signed by committee chairman Representative Mike Gallagher of Wisconsin, and its top Democrat, Representative Raja Krishnamoorthi of Illinois, BlackRock has invested more than $429 million in five funds into these blacklisted Chinese companies, WSJ reported. The committee has also demanded information from BlackRock CEO Larry Fink about the inclusion of Chinese companies in their mutual and other funds.

The companies flagged by the committee were identified as presenting national security risks, supporting forced labor, or being associated with China’s military and security apparatus. By channeling significant US capital into such entities, US firms have been accused of exacerbating national security threats and undermining US values.

Both BlackRock and MSCI have refuted the allegations of wrongdoing. BlackRock emphasized its compliance with all applicable US government laws concerning investments in China and other global markets. On the other hand, MSCI stated that it is reviewing the committee’s requests.

The investigation adds to the growing list of instances where the US-China tensions have impacted US companies, with the world’s two largest economies clashing over issues like Taiwan and Russia’s actions in Ukraine. The Select Committee, formed by Republicans when they took control of the House in January, aims to underscore the importance of competing with China and enjoys bipartisan support in the divided US Congress.

While the committee does not create legislation, it holds the power to make policy recommendations and can subpoena executives and officials if necessary. In the case of non-cooperation from executives during investigations, subpoenas may be issued.

The BlackRock probe comes on the heels of the Securities and Exchange Commission (SEC) acknowledging BlackRock’s Spot Bitcoin ETF application. This development has put additional scrutiny on the firm’s activities and has raised further questions about its investment practices.

As the investigation unfolds, US investors and the public await the outcome, hoping for greater transparency and accountability in the management of funds that could impact human rights and national security issues.

The US-China economic relationship remains in a state of flux, and investigations like these reflect the growing complexity of navigating the intersection between business interests and geopolitical tensions on the global stage.

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