BlackRock, MSCI Face Congressional Probes for Facilitating China Investments
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,
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