WASHINGTON, D.C. — Chairman Mike Gallagher and Ranking Member Raja Krishnamoorthi of the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (CCP) have revealed the alarming findings of their bipartisan investigation into American financial institutions' involvement with People’s Republic of China (PRC) companies. The investigation focused on the world’s foremost index provider, MSCI, and the world’s largest asset manager, BlackRock, along with a broader examination of the U.S. financial industry.
According to Chairman Gallagher, major financial institutions have funneled over $6.5 billion to 63 PRC companies highlighted by the U.S. government for advancing the PRC’s military capabilities or supporting CCP’s human rights abuses. Notably, MSCI indexes directed $3.7 billion, while BlackRock invested a minimum of $1.9 billion in these concerning entities.
The identified companies are involved in the development of advanced military technologies for the People’s Liberation Army (PLA) and contribute to the ongoing genocide against the Uyghur people. Shockingly, these investments are not illegal, prompting calls for legislative action by Congress to address the issue.
The report highlights how index providers and asset managers play a pivotal role in directing funds to these flagged companies. Index providers, such as MSCI, base their decisions on subjective determinations regarding the PRC market, potentially giving a stamp of approval to problematic companies by including them in their indexes. Asset managers like BlackRock then further facilitate investments in these entities, sometimes without adequately disclosing the associated risks of supporting authoritarian regimes and human rights abuses.
The investigation also unveiled that BlackRock and MSCI are not operating in isolation, as other industry players are also channeling billions of dollars to these red-flagged entities.
In light of these findings, the report urges Congress to take immediate action by implementing restrictions on U.S. investments in companies linked to the PLA, critical technology sectors, and human rights violations. Proposed legislative measures include limiting investments in blacklisted companies, mandating disclosure of PRC-related risks by U.S. public companies, and ensuring the resilience of the U.S. financial system in the face of PRC market uncertainties.
Without such regulatory interventions, the report warns that American funds will continue to support the PRC’s military advancements and human rights violations, including the Uyghur genocide.
