Two New York-based financial institutions, BlackRock Inc. and Morgan Stanley Capital International ( MSCI ), have been the subject of an investigation by the US House Select Committee into their involvement in transferring US funds to Chinese companies on the blacklist.
With US$ 8.59 trillion in assets under control as of the end of 2022, BlackRock is the largest asset management company in the world. In 1994, it was split off from Blackstone and made people in 1999. Fund managers use MSCI’s international capital, fixed salary, and real estate stocks as measures. & nbsp,
The US and Chinese Communist Party’s Select Committee on Strategic Competition, which was founded in January, announced on Tuesday that it had sent individual letters to BlackRock and MSCI requesting information about how they had facilitated US investments in about 50 Chinese companies that had been placed on a blacklist due to allegations of aiding the Chinese military or alleged violations of human rights.
Legislators informed BlackRock CEO Larry Fink and MSCI CEO Henry Fernandez on Monday that their businesses are being investigated for their investments in specific Chinese firms.
With all investments in China, BlackRock claims in a speech that it complies with all relevant US laws. It stated that it would continue to discuss the issues brought up immediately with the House Select Committee. On Tuesday, MSCI announced that it was” reviewing the question” from the committee.
On Wednesday, The Global Times criticized the US government for using human rights concerns as justification to stifle Foreign businesses and politicize trade and investment issues.
The investigation was conducted prior to US President Joe Biden’s upcoming executive order, which will forbid US companies and funds from making investments in the semiconductor, artificial intelligence ( AI ), and quantum computing industries in China. The purchase will go into influence at the beginning of 2024 and is anticipated to be signed later this month.
The US Department of Commerce’s object list, one of the biggest firewalls, was not included in the first review, the Select Committee emphasized.
According to a report with the title” America’s Coercive Diplomacy and Its Harm ,” which was released by Chinas Ministry of Foreign Affairs on May 18, the US has placed more than 1, 000 Chinese companies, including ZTE, Huawei, and DJI, on various sanctions lists, using national security as an justification for clamping down on Chinese social media apps like TikTok and WeChat. & nbsp,
Some commentators are concerned that China’s systems firms’ growth plans will be slowed by the United States’ investment restrictions.
In the great technology areas, China needs to get up in a number of areas. According to Wu Kai, a Hebei-based tech journalist, Chinese firms must amass sufficient resources in order to make some technological advancements. ” China’s investment restrictions by the US are unquestionably a detail hit.”
Wu said,” One might argue that Chinese cash infusions can take the place of American ones to make opportunities.” Although fair, this viewpoint is not entirely accurate. China lacks people who know how to participate, no income.
Wu claims that Chinese venture capital firms are much more recent than foreign ones and that it is extremely uncommon to find a top-tier Chinese high-tech company that is entirely funded locally. He claims that before receiving Chinese investments, nearly all well-known Chinese high tech companies were groomed with foreign investment.
He continues by saying that foreign purchase brings China new technologies, purchase philosophy, and services in addition to money. If US businesses still want to engage in China, he claims, they can set up offshore products to get around US investment restrictions.
China’s FDI
The silicon, AI, quantum computing, new strength, and biology sectors in China would be the targets of the Biden administration’s purchase limits, according to a US media report from April. However, following her visit to China on July 6 and 9, US Treasury Secretary Janet Yellen stated that the regulations would be strictly enforced, skipping the next two fields.
The US Senate passed a costs on July 25 mandating that US businesses inform the Treasury of any national security concerns they may have when investing in cutting-edge Chinese tech. Since it doesn’t call for review or purchase restrictions, the policy is seen as a softened version of the original Outbound Investment Transparency Act, which was introduced two years ago.
How the US investment restrictions did impact China’s ability to draw foreign investment has not yet been determined.
The US Ministry of Commerce refrained from using dollar terms to describe China’s foreign direct investment ( FDI ) on July 19. For the first six months of this year, it just stated that the FDI decreased 2.7 % to 703.65 billion yuan from a month earlier.
According to a calculation done by Asia Times, that means the number decreased 8.9 % to about US$ 102. 3 billion for the time. In the first five months of this year, it increased from a 5.6 % year-over-year decline.
In contrast, for the same time time, FDI increased by 0.5 % to US$ 10.02 billion in Vietnam and by 141 % to USD$ 10.37 million in Thailand. & nbsp,
Vice Minister of Commerce Guo Tingting reported that in the first half, investments from France, the United Kingdom, Japan, and Germany to China increased by 173 %, 135 %, 53 % and 14 %, respectively. She claimed that during the same time period, foreign investments in China’s high-tech manufacturing sector increased by 29 %.
After their top management visited China earlier this year, a spokesperson for the Foreign banking government stated in the middle of June that it would take some time for foreign corporations to make their purchase plans.
Optimistic viewpoint of BlackRock
After the crisis, Stephen Schwarzman, chairman and CEO of Blackstone, and David Solomon, managing director of Goldman Sachs, made their second trips to China in March. Bill Winters, handling chairman of Standard Chartered, and Noel Quinn, chief executive of HSBC, both traveled to Beijing in the same quarter to enter the China Development Forum 2023.
They had meetings with Chinese authorities, but they refrained from discussing the Taiwanese economy in public.
Goldman Sachs released a report on July 5 downgrading five Chinese banks to” market” scores in response to mounting worries about statewide debt crises. Share prices of Chinese banks decreased by 12 to 15 % as a result of this research report and the Bloomberg report on the same subject that was released on July 3.
On July 11, Lucy Liu, BlackRock’s investment manager for international emerging markets stocks, declared that the Chinese stock market had” over-punished.” She claimed that while there was very little chance for the native debt problem to become a systemic issue, commercial fundamentals in China were also strong. & nbsp,
China is now central to all of our thinking, according to a report by BlackRock titled” The growing opportunity in China’s private markets ,” which was released on July 15. It also stated that” China is too big of an market environment to ignore.”
” We’re witnessing a deeper and healthier business.” Personal market activity has historically been heavily biased toward domestic investors, but as the nation develops deeper and more powerful markets, there is now a genuine desire to partner with international expertise.
Study: China increases use as service growth slows.
At & nbsp, @ jeffpao3 is Jeff Pao’s Twitter account.