Billionaire investor George Soros warned that BlackRock is making a “tragic mistake” by pouring billions of dollars into China.
The philanthropist, who made $1 billion betting against the British pound, said clients of the world’s largest asset manager are likely to lose money and the national security interests of the U.S. and other democracies will be damaged.
Writing an opinion piece in The Wall Street Journal, Soros said the regime of Chinese President Xi Jinping “regards all Chinese companies as instruments of the one-party state.”
He cited the abrupt cancellation of a new issue by Alibaba ‘s Ant Group in November 2020 and disciplinary measures against ride-hailing company Didi Chuxing after it floated an issue in New York in June as reasons not to pour billions of dollars into China. He also claimed BlackRock misunderstands the Chinese market.
“The firm seems to have taken the statements of Mr. Xi’s regime at face value,” he wrote of BlackRock’s push for investors to triple their allocations in Chinese assets, adding “the profits to be earned from entering China’s hitherto closed financial markets may have influenced their decision.”
BlackRock’s research unit last month had said China should no longer be considered an emerging market, according to the Financial Times, which reported BlackRock had recommended investors boost their exposure to the country by as much as three times.
It cited an interview with Wei Li, chief investment strategist at the BlackRock Investment Institute, who had said that China “should be represented more in portfolios.”
BlackRock was approached for comment by Barron’s.
Soros said BlackRock’s money invested in China will help prop up President Xi’s regime, “which is repressive at home and aggressive abroad.”
“Congress should pass legislation empowering the Securities and Exchange Commission to limit the flow of funds to China. The effort ought to enjoy bipartisan support,” he wrote.
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