FIRST ON FOX – Consumers’ Research, a nonprofit education organization that shares consumer information, sent a letter to 10 governors Thursday morning warning of BlackRock’s ties with China.
Will Hild, executive director of Consumers’ Research, mailed the letter to the governors of Washington, Florida, New York, Nevada, South Carolina, Oklahoma, Pennsylvania, Montana, Nebraska, and West Virginia – the 10 states with the top 10 investing in government pension funds with BlackRock – to “raise awareness among American consumers that BlackRock is taking their money and betting on China.”
“BlackRock’s move to China of billions of dollars in US capital carries risks not found in other markets, risks that threaten the big bets the company is making on high returns from China,” Hild wrote.
“… Chinese companies are not subject to the same transparency standards as their western counterparts, so foreign investors often find it difficult to assess the true risk profile of their investments,” he added.
Hild urged the governors to “do their due diligence to educate themselves and their employees about the multiple risks that BlackRock’s extensive investments in Chinese companies pose, both ethically and fiduciary to the US – Pensioners and retirees are entitled. “
A BlackRock spokesman told FOX Business that the US and China “have a large and interconnected economic relationship.”
“We recognize that our stakeholders have different views on China – BlackRock takes these concerns seriously,” the spokesman said. “We are trying to balance our stakeholder concerns with our role as a global investor and trustee working for our clients as we navigate this very complicated US-China relationship. Our approach to China-related investments is in line with US foreign policy. “
Consumers’ Research also issued a “Consumer Warning” Thursday morning highlighting some of BlackRock’s work in China, noting that the investment firm, which manages approximately $ 10 trillion, first opened its Beijing office in 2008.
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After China launched mutual funds, the company encouraged clients to invest in the country, propelling billions of dollars into the world’s second largest economy. It is the first foreign-owned asset management company based outside of China to receive approval from Chinese President Xi Jinping to start a mutual fund business in the country Reuters.
In 2020 amid the COVID-19 pandemic, BlackRock CEO Larry Fink said he remained convinced that “China will be one of BlackRock’s greatest long-term opportunities for both wealth managers and investors, despite the uncertainty and decoupling of the global economy Systems that we see today. “
While a good relationship with China may be lucrative for the company, Consumers’ Research says BlackRock “has ignored the CCP’s malicious behavior and worse and has sent American pensions to China to support it”.
“Despite China’s status as a significant threat to American security, BlackRock has made large capital investments in companies closely related to the Chinese military,” the consumer warning read. “BlackRock has shown that its relationship with the CCP is more important than America’s national security interests.”
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While it is illegal for US investors to own direct shares in Chinese companies, “BlackRock fund investors own shares in mailbox companies incorporated in places like the Cayman Islands that have profit-sharing agreements with Chinese companies,” the consumer warning read.
The warning also noted that a 2017 Chinese law passed by President Xi Jinping requires the country’s businesses to comply with government requests for intelligence information. In addition, Chinese companies are not subject to the same reporting requirements as US companies.
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BlackRock added in its statement that the assets it manages are not owned by BlackRock but rather belong to its customers.
“Our duty as asset managers and trustees is to manage these assets in a manner that is consistent with our clients’ preferences. It is their decision where their assets are invested, “said the spokesman. “BlackRock supports our clients in making informed investment decisions by clearly and up-to-date disclosing all material risks associated with various investment products and markets.”
The spokesman continued, “As China’s financial services industry matures, a more robust regulatory and legal framework will be critical to building even more trust with global investors and Chinese savers. BlackRock is committed to continuously improving standards, governance and accounting transparency from all companies and countries wherever they operate in the world. Our approach to China will be no different. “
Consumers’ Research recommends that retail investors who have exposure to BlackRock “consider the risks associated with its services”; BlackRock employees are considering contacting their Human Resources Department to see if BlackRock is managing their company’s 401 (k) accounts or pension funds; and those with state or local pensions turn to state officials to do the same.
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The letter comes after the US-China Economic Security Review Commission presented its annual report to Congress highlighting the “undeniable success” of the Chinese Communist Party in its civilizational clash with the United States and other democracies. “
A summary of the report also recognizes that China is facing a number of economic challenges, including “growing debt, income inequality, demographic decline and technological dependence on the United States”.
