George Soros, billionaire and founder of Soros Fund Management LLC, stops to speak at an event on day three of the World Economic Forum (WEF) in Davos, Switzerland on Thursday, January 23, 2020.
Simon Dawson | Bloomberg | Getty Images
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 harm the national security interests of the United States and other democracies.”
The editorial, titled “BlackRock’s China Blunder,” said the firm’s decision to pump 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. This move made BlackRock the first foreign-invested company to operate a wholly-owned mutual fund business in China.
The asset manager told CNBC on Wednesday that its subsidiary China Mutual Fund created 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 asset managers and other financial institutions are helping to connect the two economically. largest economies in the world. “
BlackRock’s investment body recommended in mid-August that investors increase their investments in China up to three times in some cases. Earlier this year, CEO Larry Fink described the Chinese market as an “important opportunity to help investors achieve their long-term goals in China and abroad” in a letter to shareholders.
A sign for BlackRock Inc. hangs above their building in New York City.
Lucas Jackson | Reuters
The spokesperson said: “The majority of assets managed by BlackRock are for retirement. BlackRock clients around the world – including many US clients – are looking for a wide range of investments, including in China, to achieve retirement and other financial goals. “
BlackRock said he believes he can help China deal with its growing pension crisis by providing pension systems 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.
“Now the situation is completely different”
Soros said Tuesday that BlackRock’s investment in China shows the company has “misunderstood” Chinese President Xi Jinping.
Beijing has cracked down on several companies this year, causing Chinese stocks to sell off sharply. Soros warned that while the 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 be morally justified by the claim that they were building bridges to bring countries together, but now the situation is completely different,” Soros said. “Today the United States and China are engaged in a struggle to the death between two systems of governance: oppressive and democratic. “
Writing for the Financial Times in a separate op-ed on Aug. 30, Soros said investors in Xi’s China faced a “vulgar awakening” even before Xi’s crackdown on private company shows. That he “does not understand the market economy”.
BlackRock announced on July 14 that its assets under management reached a record high of $ 9.49 trillion in the second quarter, down from $ 7.32 trillion a year earlier.
BlackRock shares are up more than 28% year-on-year.