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Red Flags: Consumers’ Research Sounds Alarm on BlackRock Investments in China.

‘Chinese Firms Are Not Held to the Same Transparency Standards as the U.S.’


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Key Points

  • Investment management company BlackRock is pumping billions of dollars into the Chinese economy.
  • Consumers’ Research  group has issued a warning to 10 U.S. governors about the danger of investing in China.
  • The Drill Down has reported before on the dangers of BlackRock’s enormous influence.

The Drill Down has reported on the dangers of investment management company BlackRock’s “enormous and growing influence.” Peter Schweizer and Eric Eggers discussed the financial juggernaut on the podcast back in September, noting its questionable relationship with the federal government and how it may compromise the free market.

“Is this really functioning as a fully free market? If you have this financial monster, BlackRock, that is a partner of the federal government, that is buying all these mortgage-backed securities, that is getting access to all this information, and they are getting subsidized loans… If that financial monster is competing against somebody in town who’s trying to buy a couple of rental properties, or a regional company, is that really a free market? And I would argue it’s not. The federal government has tipped the scales in favor of BlackRock,” Peter said at the time.

Then there are the Biden administration’s ties to BlackRock: Brian Deese, Biden’s National Economic Council leader; Adewale Adeyemo, who serves in the Treasury Department; and Michael Pyle, economic advisor to Kamala Harris.

Now, BlackRock is doing major business in China, raising more red flags —and warnings from Consumers’ Research, a consumer advocacy group that, according to its website, “increase[s] the knowledge and understanding of issues, policies, products, and services of concern to consumers and to promote the freedom to act on that knowledge and understanding.”

Consumers’ Research has written a letter to 10 U.S. governors warning of BlackRock’s China gamble, highlighting how it’s a danger to consumers and a national security threat.

“Today BlackRock manages trillions of dollars of Americans’ hard-earned money,” said Will Hild, Executive Director of Consumers’ Research. “Consumers deserve to know what BlackRock is doing with that money. What we’ve seen is that while BlackRock is virtue signaling in the United States, they’re aiding our adversaries with American pension dollars.”

“The release of the Consumer Warning comes after new findings in the 2021 Report to Congress, which highlights the economic and national security risks of U.S. financial dealings with China, and BlackRock’s decision to seemingly double-down on its investments in the country with no regard for the Congressional report.”

(The Congressional report they are referring to addresses, among other things, “U.S.-China financial connectivity and risks to U.S. national security.”)

“Chinese firms are not held to the same transparency standards as their western counterparts, so foreign investors are often hard pressed to appreciate the true risk profile of what they’re investing in,” Hild says. Now, he’s urging governors to “do their due diligence in educating themselves and their staff on the multiple risks posed by BlackRock’s extensive investments in Chinese companies, both from an ethical standpoint as well as the fiduciary responsibility owed to U.S. pension holders and retirees.”

The Drill Down previously reported on China’s shady stock exchange practices and how they endanger American investors:

In order to get listed on foreign stock exchanges, China will use a VIE to create offshore shell companies used to finance projects without putting the whole enterprise at risk. This shady loophole allows companies to hide certain assets, keeping them off corporate balance sheets.

It also means investors are without voting rights and accounting information must remain in China – a decision the Chinese government claims is to protect “state secrets.” Because of VIEs, no one can easily know the extent to which companies are supported by the CCP.

Hild’s advice for anyone looking to drop cash into the Chinese economy: “consider the risks.”