The U.S. House of Representatives Select Committee on the Chinese Communist Party has taken notice of American investments in roughly 50 prohibited Chinese firms. On Tuesday, the committee delivered independent correspondence to MSCI and BlackRock, requesting additional data concerning the manner in which these Chinese firms have enabled U.S. investments.
The U.S. House of Representatives Select Committee on the Chinese Communist Party has drawn attention to approximately 50 Chinese companies that have been blacklisted due to alleged support for China's military or alleged human rights violations. The Committee sent letters to MSCI and BlackRock asking for further information regarding U.S. investments in those companies. It was noted that the inquiry did not include the U.S. Department of Commerce's Entity List, and the letters stated that "the true scale is likely much larger." In a statement, MSCI maintains that it does not "facilitate" investments in any country, but rather their indexes measure the performance of equity markets open to international investors, and they adhere to all applicable US laws. The request for information is currently being reviewed, and BlackRock has yet to respond to a CNBC request for comment. The full list of mentioned companies is mainly composed of state-owned businesses.
The U.S. House committee evaluated the figure of five BlackRock funds investing more than $429 million into blacklisted names. The same funds represented almost 5% of the MSCI China A Index's value as of March 1, the committee noted.
The U.S. has stepped up its analysis of financial dealings with China in light of the recent request for information. Last week, the Senate overwhelmingly passed a bill which obligates U.S. companies to alert the Treasury Department when investing in advanced Chinese technology due to security issues. The earlier form of this legislation was more strict, calling for investment limitations. It was widely anticipated that President Joe Biden would put forth an executive order limiting U.S. spending on higher-end Chinese tech, though nothing has been confirmed just yet.
In the previous month, the House committee announced that it had mailed correspondence to four venture capital companies from the U.S. in relation to their funding of artificial intelligence, semiconductor and quantum computing enterprises from China. The committee claimed that the technology was possibly being used for military projects and to further human rights abuses, but Beijing has rejected those accusations and counter-argued with assertions of "human rights infringements in the U.S."
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