US Financial Markets Funding China’s Military and Human Rights Abuses

Gordon Chang, senior fellow at Gatestone Institute, weighed in on Secretary of State Antony Blinken’s recent trip to Shanghai and the TikTok bill as concerns over China’s growing threat continue. Meanwhile, a new report by a bipartisan House Select Committee revealed that U.S. financial markets are funneling investment dollars worth more than $6.5 billion into Chinese companies blacklisted or red-flagged by the US government due to links with Beijing’s military modernization and human rights abuses against ethnic minorities in Xinjiang province, such as fighter jet manufacturers and technology providers for genocide efforts. The committee warned that while these activities are not currently illegal under current law, Congress must act quickly before Americans’ hard-earned savings and retirement money continue to support the military modernization of a foreign adversary and human rights violations in China through U.S.-based financial institutions. Index providers like MSCI have created indexes used by fund managers and other investors that seek to mirror Chinese markets, but those investing via these products are unaware they may be supporting Beijing’s efforts against ethnic minorities or military modernization due to the lack of restrictions on investment in listed firms under current law. The committee recommended three policies for Congress to address this issue before billions more dollars continue funding China’s activities. BlackRock, Vanguard and other asset managers responded that they fully cooperate with applicable US laws but called for clearer rules from policymakers. MSCI confirmed compliance with relevant regulatory requirements as the report highlighted index funds do not funnel investments or make recommendations regarding countries or companies in line with its methodologies.