BlackRock responds to George Soros’ criticism of investing in China

LONDON – BlackRock, the world’s largest asset manager, has responded to strong criticism from billionaire investor George Soros over the company’s investments in China.

Writing in the Wall Street Journal on Tuesday, Soros described BlackRock’s initiative in China as a “tragic mistake” that “would undermine the national security interests of the United States and other democracies.”

The editorial, titled “BlackRock’s China Blunder,” said the firm’s decision to pour billions into the country was a “bad investment” that could cost its customers money.

It comes shortly after BlackRock launched a set of mutual funds and other investment products for Chinese consumers. The initiative enabled BlackRock to become the first foreign-invested company to operate a wholly-owned business in the mutual fund industry in China.

The asset manager told CNBC on Wednesday that its mutual fund subsidiary in China set up its first fund in the country after raising 6.68 billion Chinese yuan ($ 1.03 billion) from more than 111,000 investors.

“The United States and China have an important and complex economic relationship,” a BlackRock spokesperson said in response to Soros’ comments.

“Total trade in goods and services between the two countries exceeded $ 600 billion in 2020. Through our investing activity, US-based asset managers and other financial institutions are contributing to the economic interconnection of the two largest economies in the world.

BlackRock’s Investment Institute recommended in mid-August that investors increase their exposure to China up to three times in some cases. Earlier this year, CEO Larry Fink, in a letter to shareholders, described the Chinese market as “an important opportunity to help achieve the long-term goals of investors in China and abroad.”

“The overwhelming majority of assets managed by BlackRock are for retirement. BlackRock clients around the world, including many US clients, are seeking a wide range of investments, including in China, to achieve retirement and other financial goals, ”the spokesperson said.

BlackRock added that he believed he could help China deal with its growing pension crisis by providing pension system expertise, products and services.

“We believe that globally integrated financial markets provide individuals, businesses and governments of all countries with better and more efficient access to the capital that supports economic growth around the world.

Soros said Tuesday that BlackRock’s investments in China showed the company appeared to “misunderstand” Chinese President Xi Jinping.

Beijing has cracked down on several companies this year, causing Chinese stocks to drop sharply. Soros warned that while new rules were designed to target tech companies, they should also be seen as a sign that Xi will do whatever it takes to stay in power.

“Earlier efforts could have been morally justified by claims that they were building bridges to bring countries together, but the situation is now totally different,” Soros said. “Today, the United States and China are engaged in a conflict to the death between two systems of governance: repressive and democratic.

Writing for the Financial Times in a separate op-ed on Aug. 30, Soros said investors in Xi’s China were facing a “wake-up call,” before adding that Xi’s crackdown on private companies showed that he “does not understand the market economy”.

BlackRock announced on July 14 that its assets under management hit a record high of $ 9.49 trillion in the second quarter, down from $ 7.32 trillion a year earlier.

BlackRock shares have risen more than 28% since the start of the year.