Congress Launches Investigation of Investment Firms for Strengthening China’s Military

Soldiers of the People's Liberation Army shout during the rehearse of the parade early morning on October 01, 2019, in Tiananmen Square, Beijing, China. / Getty Images
August 1, 2023

A congressional committee is investigating top American investment firms for funneling millions to companies flagged by the U.S. government for strengthening the Chinese military and aiding in human rights abuses.

The House Select Committee on the Chinese Communist Party launched probes into BlackRock and MSCI on Monday, according to the Wall Street Journal. A committee review found the firms are facilitating investment in more than 60 Chinese companies flagged by U.S. federal agencies. Five funds managed by BlackRock, for example, have invested more than $429 million in such companies.

Although the activity is legal, U.S. firms are "exacerbating an already significant national-security threat and undermining American values," said committee chair Rep. Mike Gallagher (R., Wis.)  and ranking member Rep. Raja Krishnamoorthi (D., Ill.) in letters sent Monday.

The investigation comes as the Biden administration remains slow to block American money and technology from fueling Chinese military tech advancement and human rights abuses. President Joe Biden has been planning since June to implement new restrictions on U.S. AI chips sent to China, but the new rules are now expected by mid-August. U.S. chipmakers traveled to Washington last month to meet with White House officials, warning them against tight restrictions on chip exports to China.

The Biden administration also granted Chinese tech company Huawei $60 billion in export licenses earlier this year, despite national security sanctions on the company. Administration officials from the Defense, State, and Commerce departments last month told Congress their departments would seek to prevent the company from receiving American tech. Only the FCC acted to shut off American tech flow to Huawei last week.

The Washington Free Beacon reported last month the top three largest state pension funds in the United States invest millions in Chinese companies blacklisted by the federal government for national security and human rights reasons. Many state pension funds invest in index funds managed by investment firms like BlackRock and MSCI. A similar review of the federal employee pension fund found investments in sanctioned Chinese companies.

The select committee continues to probe ties between the CCP and American companies. Gallagher and Krishnamoorthi launched an investigation last month into venture capital firms invested in Chinese AI, semiconductor, and quantum computing companies. Former intelligence official Bill Evanina told Congress Wednesday that a Chinese company trying to build a battery factory in Michigan will "100 percent" bring spies to the United States.

Published under: China