Dialectical duel of investment giants on account of investment. George Soros’s criticism of BlackRock for increasing its investments in China has prompted a response from the world’s largest fund manager to the well-known billionaire philanthropist. From the firm they have responded by pulling muscle for the good progress of their investments in the Asian giant.
If Soros told BlackRock to enter China with everything that President Xi Jinping is turning into an “updated version” of Mao Zedong’s, the manager assures that, to begin with, its investment fund subsidiary in the country created its first fund there after raising 6.68 billion Chinese yuan ($1.03 billion) from more than 111,000 investors.
“The US and China have a large and complex economic relationship. Total trade in goods and services between the two countries exceeded $600 billion in 2020. Through our investment activity, US-based asset managers and other financial institutions contribute to the economic interconnection of the two largest economies in the world,” defends a spokesperson for the manager, according to CNBC.
“We believe that globally integrated financial markets provide people, businesses and governments in all countries with better and more efficient access to the capital that supports economic growth around the world.”
In his opinion box in the WSJ, Soros criticized that this bet on China would make BlackRock clients lose money. “The vast majority of assets BlackRock manages are for retirement. BlackRock clients around the world – including many US clients – seek a wide range of investments, including in China, to achieve their retirement and other financial goals.” responds the spokesperson for the firm, from where they consider that this can help China to face its growing retirement crisis by contributing their experience in retirement systems, products and services.
This run-in with Soros comes shortly after BlackRock launched a suite of mutual funds and other investment products for Chinese consumers. With this initiative, the firm has become the first foreign capital company operating in the investment fund sector in China.
Soros, for his part, has been warning for weeks that the regulatory storm in China has only just begun and that Xi will seek to perpetuate himself in power, for which he will undermine companies that can form an alliance against him. He also claims that investments in China compromise the “national security” of the US.
“This process has developed in the last year and has been in crescendo in recent weeks. It began with the abrupt cancellation of a new issue of in November 2020. Then came the -the Chinese Uber- after it went public in New York in June. Things culminated with US financed. This had on offshore markets, hitting New York-listed Chinese companies and shell companies,” adds the investor in his WSJ forum.
By contrast, the BlackRock Investment Institute recommended in mid-August that investors increase their exposure to China by up to three times in some cases. Earlier this year, CEO Larry Fink described the China market as a “significant opportunity to help meet the long-term objectives of investors in China and internationally” in a letter to shareholders.
BlackRock insists on looking at China
Despite the regulatory pressure from Beijing and uncertainties such as the one arising from the , this same institute pronounced itself like this in its financial commentary this week despite: “China is already a clear pole of global growth. We believe that the time has come to treat it as well as a separate investment destination from emerging markets and developing countries. The Chinese authorities have begun to ease their policies as growth slows, but we believe they will broadly maintain this policy stance.”
“We think the crackdown on some private industries could go on for years, but its intensity will likely fluctuate. We haven’t seen the peak of the regulatory campaign yet, but we could see its pace and intensity moderate amid further growth. slow”, they also maintain.
This duel threatens to intensify in the short term. Soros, in addition to BlackRock, pointed out in his writing other firms such as Goldman Sachs or Blackstone for their interest in China. From these companies the message seems clear: China can still make a profit.
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