A congressional committee in the United States is currently investigating asset management firm BlackRock for its role in facilitating investments into Chinese companies that the U.S. government has blacklisted.
Retirement Funds Tied to Blacklisted Chinese Firms
Lawmakers have expressed concern that Americans’ retirement funds are unknowingly being funneled into Chinese firms flagged for security and human rights issues, and they believe BlackRock has been involved in this process. The House of Representatives Select Committee on the CCP has notified BlackRock about the investigations, with the intention of gathering facts to inform U.S. policies on capital flows to China. According to the committee, the massive influx of American capital into these Chinese entities further exacerbates national security threats and undermines American values.
The committee has claimed that the firm has facilitated the investment of over $429 million across five funds in such blacklisted Chinese companies. The committee has raised concerns over the scope of these investments, suggesting that the true scale may be much larger.
In response to the allegations, BlackRock has denied any wrongdoing. The firm stated that it complies with all applicable U.S. government laws in its investments, both in China and markets around the world. The investment firm, which manages over $9 billion of assets, expressed its willingness to engage directly with the Select Committee regarding the issues raised.
The news of the investigation has impacted BlackRock’s stock, with shares down 0.8% in mid-afternoon trade, underperforming the main stock indexes.
The Broader U.S.-China Tensions
This investigation is just one example of the wider implications of the ongoing tensions between the U.S. and China. As these tensions continue, U.S. companies are facing challenges in their operations and investments related to China.
The impact of the investigation is not limited to BlackRock alone. Other asset management firms like Franklin Templeton, VanEck, and WisdomTree also have funds or ETFs with Chinese assets. However, these firms have not yet responded to requests for comment on their investments.
The Select Committee, led by Republican Rep. Mike Gallagher of Wisconsin and Democrat Rep. Raja Krishnamoorthi of Illinois, holds significant power in making policy recommendations and can subpoena executives and officials. While it has not used this authority until now, Representative Gallagher had previously stated his intention to issue subpoenas for uncooperative executives.
As the investigation unfolds, it remains to be seen how BlackRock and other asset managers with Chinese investments will navigate the complexities of U.S.-China relations and comply with the committee’s inquiries.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.