- A U.S. congressional committee on China is investigating asset management giant BlackRock and index provider MSCI, saying the companies have been investing in blaclisted Chinese firms.
- BlackRock has denied any wrongdoing, asserting that it complies with all applicable US government laws.
- MSCI has stated that it is “reviewing the inquiry” from the committee.
The world’s most prominent asset management firm, BlackRock, along with index provider MSCI, is set to be investigated by US authorities. According to the House of Representatives Select Committee on the Chinese Communist Party (CCP), both companies have been investing in Chinese firms blacklisted in the US.
The House of Representatives Select Committee on CCP has asserted that the firms have facilitated the flow of American capital into companies the US government had found guilty of fueling China’s military advancement or human rights abuses.
However, BlackRock has denied any wrongdoing stating:
‘’Like many global asset managers, BlackRock offers our clients several strategies to invest in or exclude China from their portfolios. Most of our client’s investments in China are through index funds, and we are one of 16 asset managers currently offering US index funds investing in Chinese companies.’’
Additionally, BlackRock asserted that with all investments in China and markets worldwide, BlackRock complies with all applicable US government laws. ‘’We will continue engaging with the Select Committee directly on the issues raised.’’
China and USA are two of the biggest economies globally. Further, an economic dispute could harm both nations as the world’s two largest economies clash over hot-button issues, such as Taiwan and Russia’s invasion of Ukraine.
On the other hand, a spokesperson from China’s embassy, in a statement to Reuters, said:
‘’Overstretching the concept of national security and politicizing economic, trade and investment issues runs counter to the principles of market economy and international trade rules.’’
MSCI said on Tuesday that it was “reviewing the inquiry” from the committee.
The Committees initial review regarding BlackRock and MSCI
The Republicans formed the Select Committee in early January when they took control of the House. The committee makes policy recommendations and has the power to subpoena executives and officials, something it has not done until now.
In April, the committee’s Republican chair Representative Mike Gallagher said he would issue subpoenas for executives who do not cooperate with its investigations. Additionally, Leland Miller, chief executive officer at advisory firm China Beige Book said:
‘’Companies are not going to disrupt their business model on their own. They’re going to have to be ordered.’’
The Wall Street Journal first reported the committee’s action against BlackRock and MSCI. An initial review by the committee found that the companies allow for investments into dozens of blacklisted companies. The committee stated:
‘’ The true scale is likely much larger.’’
As the dispute among the companies takes root, it has intensified the de-dollarization in the East and Asian countries, opening up opportunities for alternative currencies such as crypto to further their dominance.
This comes as the Securities and Exchange Commission (SEC) accepted BlackRock’s spot Bitcoin ETF application earlier last month, adding them to the regulator’s tab.
