BlackRock responds to Soros' criticism of its China investments

Hedge fund tycoon George Soros condemned BlackRock's recent billion-dollar investment in China in a Monday op-ed published by The Wall Street Journal.

Soros called BlackRock's recent decision to introduce mutual funds in the country last month a "tragic mistake" that he said is "likely to lose money for BlackRock’s clients and … damage the national security interests of the U.S. and other democracies."

"The United States and China have a large and complex economic relationship," a BlackRock spokesperson said in response. "Total trade in goods and services between the two countries exceeded $600 billion in 2020. Through our investment activity, U.S.-based asset managers and other financial institutions contribute to the economic interconnectedness of the world’s two largest economies."

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After introducing mutual funds into China, the company told its clients to invest in the country, pushing billions of dollars into the world's second-largest economy.

It is the first foreign-owned, asset management company based outside of China that has received approval from Chinese President Xi Jinping to launch a mutual fund business in the country, according to Reuters.

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"The overwhelming majority of the assets BlackRock manages are for retirement. BlackRock’s clients around the world – including many U.S. clients – seek a broad range of investments, including in China, to achieve their retirement and other financial objectives," the spokesperson said, adding that China is "taking measures to address its growing retirement crisis."

Blackrock thinks it can help China "address that challenge by providing … retirement system expertise, products, and services."

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"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 across the entire world," the spokesperson said.

Soros, however, believes U.S.-China relations are on shaky ground with the world's two largest economies "engaged in a life and death conflict between two systems of governance: repressive and democratic," and that BlackRock's investment in the country "will help prop up President Xi’s regime."

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The billionaire specifically took aim at Blackstone co-founder Stephen Schwarzman and former Goldman Sachs President John L. Thornton for jumping at "the prospect of business opportunities dangled by Mr. Xi."

He concluded by calling on the Securities and Exchange Commission "to limit the flow of funds to China."