BlackRock rebuts Soros’ criticism of its investment in China

Billionaire investor Ray Dalio joins the US asset manager in defending investments in China

BlackRock has hit back against the criticisms levelled by billionaire investor and political donor George Soros, defending its decision to introduce a set of mutual funds in China. 

BlackRock defends Chinese venture

A spokesperson for the world’s largest asset manager said that the economic relationship between the United States and China was both “large and complex” and that its investment activity allows “US-based asset managers and other financial institutions” to “contribute to the economic interconnectedness of the world’s two largest economies”.

BlackRock, which has more than $9trn (£6.55trn) in assets under management, is the first foreign-owned company to operate a wholly owned enterprise in the Chinese mutual fund industry. 

The spokesperson stressed that as most of the assets it manages are for retirement, its clients “seek a broad range of investments, including in China, to achieve their retirement and other financial objectives”.

They added: “We believe that globally integrated financial markets provide people, companies and governments in all countries with better and more efficient access to capital that supports economic growth around the world.”

Soros’ criticism of BlackRock

The full-throated defence came in response to an op-ed in the Wall Street Journal by George Soros entitled BlackRock’s China Blunder, in which the investor and Open Society Foundation founder lamented the asset manager’s push into China as a “tragic mistake”. 

Soros added: “It is likely to lose money for BlackRock’s clients and, more important, will damage the national security interests of the US and other democracies.”

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BlackRock has close ties to the US government. At the height of the Covid-19 crisis it was chosen by the Federal Reserve to manage a number of the central bank’s record-breaking corporate bond-buying programmes and to buy the Federal Reserve System of commercial mortgage-backed securities (CMBS). 

The 91-year-old argued that the firm is wrong to draw a distinction between China’s state-owned and privately owned businesses because “the regime regards all Chinese companies as instruments of the one-party state”.

Ray Dalio defends investing in China

Soros’ criticism has stoked a fierce debate on Wall Street. On Wednesday, billionaire investor Ray Dalio defended making investments in places such as Singapore and China. He said: “It’s part of the world that one can’t neglect and not only because of the opportunities it provides but you lose the excitement if you’re not there. And so our objective is to be there both economically and investment-wise.”

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