BlackRock Denies Pulling Out of China After Closing Fund

Asset management giant BlackRock has denied media reports claiming that it is withdrawing investments from China despite recently shuttering a China-focused fund.

“Our commitment to the Chinese market remains steadfast,” the newspaper China Daily quoted an unnamed BlackRock spokesperson saying in a September 7 article.

BlackRock Recently Closed Its China Flexible Equity Fund

The somewhat puzzling statement comes just after the company announced, on August 31, that it would terminate its China Flexible Equity Fund.

BlackRock, the largest asset manager in the world, with over $8.59 trillion in assets under management as of December 31, awaits a decision on a spot Bitcoin ETF. It applied for approval back on June 16.

However, the SEC has chosen to postpone its ruling on all spot Bitcoin ETFs, including those from Invesco, WisdomTree, ARK Invest, Valkyrie, and several others, until at least October 17.

The China Flexible Equity Fund is a China-focused offshore fund. As of September 4, it had a net asset value of just $22.3 million. BlackRock said it is closing the fund as part of a “routine fund management operation” to regularly evaluate products.

The firm claims this move protects investor interests. The strategy in question first launched in October 2017.

However, the fund’s closure conflicts with BlackRock’s stated commitment to China. Shutting it down while publicly denying a China pullout has fueled confusion over BlackRock’s true intentions.

BlackRock will inevitably face questions about whether it is quietly reducing Chinese investments amid political tensions. 

Critics could point out that the China Flexible Equity Fund failed to attract significant interest since its launch in October 2017, amassing only $22.3 million in assets under management. BlackRock itself acknowledged the lack of investor appetite and a bleak outlook for future subscriptions as reasons for closing the fund.

US Hostility Against Beijing Is at an All-Time High

At the same time, political pressures against investments in China have mounted in America in recent years. Tensions escalated under the Trump administration and remain high even now under President Joe Biden. Furthermore, most Republican candidates eying the 2024 presidential race have adopted staunch anti-China rhetoric.

One candidate, entrepreneur Vivek Ramaswamy, called BlackRock part of “the most powerful cartel in human history.”

Additionally, on July 31, the House Select Committee on the Chinese Communist Party leveled accusations against BlackRock. The lawmakers objected to the channeling of money to Chinese firms allegedly working against US interests. 

The committee claimed that BlackRock’s investments are flowing into companies that Washington has identified as contributing to China’s military or to human rights abuses. In light of these allegations, the committee has demanded documents about BlackRock’s China holdings.

BlackRock did not respond by press time to a request for comment.