BlackRock Inc. and MSCI Inc. are under investigation by the U.S. congressional House Select Committee on the Chinese Communist Party for allegedly channeling American investment into Chinese companies blacklisted by the U.S. government. These companies are accused of human rights abuses and supporting China's military. The committee has demanded information from BlackRock by mid-August regarding its investment in Chinese companies through its mutual and other funds. The panel identified that five BlackRock funds have more than $429 million invested in such Chinese firms.
The lawmakers behind the investigation have expressed strong concerns about U.S. companies profiting from investments that support China's military advancement and facilitate human rights violations. In a letter to BlackRock CEO Larry Fink, Representatives Mike Gallagher and Raja Krishnamoorthi stated that it was "unconscionable" for U.S. companies to profit from such investments. They also mentioned that these investments were "against the interests of" the United States.
In response, BlackRock issued a statement affirming that it is among 16 asset managers offering U.S. index funds investing in Chinese companies. The firm emphasized that it complies with all applicable U.S. government laws with regard to investments in China and other markets around the world. MSCI also acknowledged the committee's requests and stated that the company is in the process of reviewing them.
This investigation aligns with the broader tension between the U.S. and China over technology and trade. U.S. officials are reportedly considering new measures to screen and potentially restrict investment in China's semiconductor, quantum computing, and artificial intelligence sectors. China's government, on the other hand, has warned that it would retaliate against any new investment limitations, demonstrating an ongoing struggle in the Sino-American economic relationship.
