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Congress Questions BlackRock, MSCI for Investing in Chinese Military and State Companies

‘Unconscionable’ for firms managing trillions to help ‘fuel the military advancement of America’s foremost foreign adversary,’ lawmakers say
Leo Timm
Leo Timm covers China-related news, culture, and history. Follow him on Twitter at @kunlunpeaks
Published: August 3, 2023
A sign for BlackRock Inc hangs above their building in New York U.S., July 16, 2018. (Image: REUTERS/Lucas Jackson)

As a “direct result” of actions by gargantuan asset management firm BlackRock and leading investment index provider MSCI, millions of Americans are “unwittingly funding” the Chinese Communist Party and its military forces, the People’s Liberation Army, a bipartisan House committee has said. 

BlackRock, known for its oversight of a prodigious $9 trillion across virtually all sectors — notably the housing market, where it manages property worth hundreds of billions  — would be the world’s third-largest economy if all those assets were a country. This year, funds worth more than $13 trillion were based on MSCI indexes. 

On Monday (July 31), the House of Representatives China Select Committee delivered letters to BlackRock CEO Larry Fink and MSCI chair Henry Fernandez calling attention to their groups’ direction of investments towards over 60 Chinese companies or organizations on the American government’s blacklist. 

Such companies are owned by or linked to the CCP and PLA, which is the world’s largest military force.


BlackRock and MSCI face Congressional probes for activity that is “exacerbating an already significant national security threat and undermining American values,” according to Rep. Mike Gallagher (R-WI) and Rep. Raja Krishnamoorthi (D-IL.), who head the China Select Committee. 

The firms have facilitated the flow of American capital into companies the U.S. government had found guilty of fueling China’s military advancement or human rights abuses, the House of Representatives’ Select Committee on the Chinese Communist Party (CCP) said in letters dated Monday and seen by Reuters on Tuesday.

“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 lawmakers wrote. 

Funding Beijing’s ‘mission of technological supremacy’

The committee’s letters drew attention to more than $400 million invested by BlackRock in blacklisted Chinese firms across a sample of five funds. Meanwhile, around 5 percent of the MSCI China A Index is tied to such Chinese firms. 

Among the companies on the U.S. authorities’ Entities List that are on MSCI’s indexes are Chinese military aircraft manufacturer AICC; BGI Genomics, which scalps vast amounts of biometric data from Americans and is involved in child labor, and ZTE, which has been restricted by the U.S. since the Trump era and had its communications equipment banned last year on account of the risks to national security. 

The MSCI logo is seen in this June 20, 2017 illustration photo. (Image: REUTERS/Thomas White/Illustration/File Photo)

Gallagher and Krishnamoorthi in their letters expressed particular concern about U.S. capital funding the CCP’s stated mission of technological supremacy.” 

Republicans formed the Select Committee when they took control of the House in January, as part of an effort to convince Americans why they should care about competing with China. A hard line toward China is one of the few policies with bipartisan support in the deeply divided U.S. Congress.

In Communist China, almost all major companies have close ties to the Party authorities, which emphasize the regime’s power to mobilize private firms’ assets and resources to further its political or military goals. 

Many Chinese firms are also complicit in human rights abuses, such as by benefiting from forced labor. 

BlackRock denied any wrongdoing. “With all investments in China and markets around the world, BlackRock complies with all applicable U.S. government laws. We will continue engaging with the Select Committee directly on the issues raised,” the firm said on Tuesday.

Shares in BlackRock were down 0.8 percent in mid-afternoon trade, underperforming the main stock indexes.

Growing threats

The House select committee asked the firms to be forthcoming in providing detailed information about their China-linked assets and activities, in what Reuters said was a sign of “how tense relations between the two countries are rippling out into corporate America.”

In addition to the 2-plus million troops of the PLA, the Chinese regime also fields millions of paramilitary police and other auxiliary personnel, who are generally tasked with enforcing the Communist Party’s rule within China. 

While its capabilities and organization are largely untested, the PLA fields increasing advanced weaponry, including a growing fleet of aircraft carriers and cruisers, fifth-generation fighter jets, anti-ship ballistic missiles, hypersonic nuclear missiles designed to evade U.S. defenses, and a rapidly growing arsenal of nuclear warheads. 

Moreover, the CCP has emphasized the possibility of “recovering” the island of Taiwan, a U.S. ally home to 23 million people, by force if necessary. 

Among the Chinese companies funded by BlackRock include a firm linked to the China General Nuclear Power Group, which the U.S. believes has stolen American nuclear technology, and Norinco, a major producer of weapons and ammunition for the PLA. 

The House Select Committee does not write legislation, but makes policy recommendations. It also has the power to subpoena executives and officials, something that it has not done until now.

Rep. Gallagher said in April he will issue subpoenas for executives who do not cooperate with its investigations.

“Companies are not going to disrupt their business model on their own. They’re going to have to be ordered,” said Leland Miller, chief executive officer at advisory firm China Beige Book.

Reuters contributed to this report.