"Wall Street's Investment in China Also a Security Threat"… US House Special Committee Investigates BlackRock and MSCI

The U.S. House Special Committee is investigating BlackRock and Morgan Stanley Capital International (MSCI) regarding capital investments in Chinese companies.

On the 1st (local time), according to reports from the U.S. Wall Street Journal (WSJ) and Reuters, the U.S. House Special Committee on Strategic Competition between the United States and the Chinese Communist Party (U.S.-China Strategic Competition Special Committee) sent letters the previous day to asset management firm BlackRock and financial index developer MSCI, announcing the initiation of an investigation into their activities at the committee level.

Headquartered in New York, BlackRock is the world's largest asset management company with assets under management exceeding $9 trillion (11,614 trillion KRW). MSCI is a financial company that develops stock indices used as benchmarks by institutional investors worldwide.

In the letter, the committee pointed out that the activities of the two companies facilitated the inflow of U.S. capital into more than 60 Chinese companies identified by U.S. government agencies as linked to security and human rights violation issues.

Preliminary investigations revealed that investments in problematic Chinese companies from just five China-related funds managed by BlackRock amounted to a total of $429 million (550 billion KRW).

The committee particularly highlighted that companies on the security threat blacklist, such as Chinese telecommunications firm ZTE and defense contractor Aviation Industry Corporation of China (AVIC), a manufacturer of fighter jets, were included in the investment target list.

The committee's assessment is that due to decisions made by BlackRock and MSCI, Americans have unknowingly provided financial support to Chinese companies that act against U.S. interests.

MSCI has faced criticism for triggering global capital inflows into Chinese companies by significantly increasing the weighting of mainland Chinese stocks in its Emerging Markets (EM) index during a 2018 rebalancing.

The U.S.-China Strategic Competition Special Committee is a House body established earlier this year with bipartisan support. Although it lacks legislative authority, it has the power to hold hearings on specific issues.

This content was produced with the assistance of AI translation services.