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U.S. House committee flags MSCI, BlackRock for China investments

A bank employee count China’s renminbi (RMB) or yuan notes next to U.S. dollar notes at a Kasikornbank in Bangkok, Thailand, January 26, 2023.

Athit Perawongmetha | Reuters

BEIJING — U.S. investments in around 50 blacklisted Chinese companies have drawn the attention of the U.S. House of Representatives Select Committee on the Chinese Communist Party.

The committee on Tuesday announced it sent separate letters to MSCI and BlackRock asking for more information about the firms’ facilitation of U.S. investments into those Chinese companies.

The Chinese companies were blacklisted over claims of supporting China’s military or alleged human rights abuses, the committee said. It noted the initial review did not include one of the largest blacklists, the U.S. Department of Commerce’s Entity List.

“The true scale is likely much larger,” the letters said.

MSCI said in a statement it is reviewing the request for information, and that it doesn’t “facilitate” investments in any country. “MSCI indexes measure the performance of equity markets available to international investors, and comply with all applicable US laws,” the indexing giant said.

BlackRock did not immediately respond to a CNBC request for comment.

Here’s the full list of names, which are primarily state-owned companies:

Combined list of Chinese companies flagged by U.S. House committee

AECC Aero-Engine Control Company Limited
AECC Aviation Power Co., Ltd.
Aerospace Ch Auv Company Limited
AVIC Aviation High-Technology Company Limited
AVIC Electromechanical Systems Company Limited
AVIC Heavy Machinery Company Limited
AVIC Helicopter Company Limited
AVIC Industry-Finance Holdings Company Limited (a.k.a. AVIC Capital Company Limited)
AVIC Jonhon-Optronic Technology Co., Ltd.
AVIC Shenyang Aircraft Company Limited
AVIC Xi’an Aircraft Industry Group Company Limited
Avicopter PLC
BGI Genomics Co., Ltd.
CETC Cyberspace Security Technology Co., Ltd.
CGN New Energy Holdings Co., Ltd.
CGN Power Co., Ltd.
Changsha Jingjia Microelectronics Co., Ltd.
China CSSC Holdings Ltd.
China Mobile Communications Group Company Limited
China National Chemical Corporation Ltd. (ChemChina)
China National Chemical Engineering Group Corporation Limited
China National Nuclear Corporation (CNNC)
China National Nuclear Corporation Hua Yuan Titanium Dioxide Company Limited
China National Nuclear Power Company Limited
China National Offshore Oil Corporation (CNOOC)
China Railway Construction Corporation Limited (CRCC)
China Spacesat Company Limited
China State Construction Engineering Corporation Limited
China State Construction Group Company Limited
China State Construction International Investment Group Company Limited
China Telecommunications Corporation Group
China United Network Communications Group Company Limited
CNOOC Energy & Technology Services Limited
Costar Group Company Limited ? CRRC Corporation Ltd.
CRRC Corporation Ltd.
CSSC Offshore & Marine Engineering (Group) Company Limited
Dawning Information Industry Company Limited
Fujian Torch Electron Technology Company Limited
Hoshine Silicon Industry Company Limited
Inspur Electronic Information Industry Company Limited
Jiangxi Hongdu Aviation Industry (Group) Corporation Limited
North Industries Group Red Arrow Company Limited
Offshore Oil Engineering Company Limited
Qihoo 360
Semiconductor Manufacturing International Corporation (SMIC)
Xinjiang Daqo New Energy Co., Ltd.
Zhejiang Dahua Technology Company Limited
Zhuzhou CRRC Times Electric Company Limited
ZTE Corporation

Source: https://selectcommitteeontheccp.house.gov/media/press-releases/unconscionable-profit-fueling-chinas-military-select-committee-launches

The U.S. House committee estimated that five BlackRock funds have invested more than $429 million into the blacklisted names. Those companies also accounted for nearly 5% of the MSCI China A Index’s value as of March 1, the committee said.

U.S.-China tensions

The request for information comes as the U.S. has increased its scrutiny of financial ties with China.

Last week, the U.S. Senate overwhelmingly backed legislation that would require U.S. firms to notify the Treasury when investing in advanced Chinese technology on national security concerns. An earlier version of the legislation had called for investment restrictions.

President Joe Biden has long been expected to issue an executive order that would restrict U.S. investment in high-end Chinese tech. No action has yet been announced.

Last month, the House committee said it sent letters to four U.S. venture capital firms over their investments into Chinese artificial intelligence, semiconductor and quantum computing companies.

The committee cited allegations that China was using such technologies for military development or perpetuation of human rights abuses.

Beijing has denied such abuses, and published claims of “human rights violations in the United States.”

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