Business

House to Probe BlackRock and MSCI on Investments in Sanctioned China Firms

By Belal Awad · August 7, 2023

Congress is conducting a bipartisan investigation into alleged investments by U.S. firms into blacklisted Chinese companies. US Government/Raw Pixel

The US House Select Committee on the Chinese Communist Party (CCP) has launched an investigation into two New York-based investment firms, BlackRock and MSCI, regarding their alleged investments in blacklisted Chinese companies.

The inquiry follows revelations that BlackRock, an asset management giant, and MSCI, an investment index provider, may have enabled the investment of American funds into dozens of Chinese companies that have been blacklisted by Washington. The Chinese firms have been blacklisted based on their their alleged involvement in threats to US national security or human rights abuses committed by the Chinese government.

Acting in bipartisan fashion, the House committee - led by Republican Chair Mike Gallagher and Democratic Ranking Member Raja Krishnamoorthi - said on X, the platform formerly known as Twitter, that BlackRock is using U.S. funds to back Chinese companies that “develop and build weapons for the People’s Liberation Army — the PRC’s military — and advance the CCP’s stated mission of technological supremacy.”

The House post added, “It is unconscionable for any U.S. company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses.”

The House committee is seeking detailed information about the facilitation of U.S. investments into Chinese firms by BlackRock and MSCI. The panel will also review due diligence conducted on prospective investments by the two U.S. firms, as well as details on the transparency of these investments to investors and the public.

BlackRock has invested more than $429 million in Chinese companies that pose national security risks to the U.S., according to the committee.

BlackRock said it will “continue engaging” with the House panel on the issues raised, while MSCI said it was reviewing the request the committee’s request.

Light Wave commentary

The House Select Committee’s investigation into Blackrock and MSCI underscores the growing tension between the US and China, particularly in the financial sector. It spotlights the complexities of global finance, where investments can inadvertently support activities contrary to national interests. The outcome of this probe could have significant implications for international investment practices and US-China relations.