WASHINGTON — The Coalition for a Prosperous America (CPA) today released a new “case study” report to Congress that highlights the growing influence of the Chinese Communist Party (CCP) over U.S. financial firms. The report titled “Inside the Wire: Wall Street’s Joint Ventures with the Chinese Communist Party” reveals how U.S. financial giants — including BlackRock and Goldman Sachs — have formed joint ventures (JVs) with state banks controlled by the Chinese Communist Party (CCP), giving Beijing unprecedented influence over major U.S. financial firms and Wall Street executives. These partnerships provide the CCP with dangerous leverage that poses a serious risk to U.S. economic and national security.
KEY FINDINGS
- Large Wall Street firms, like BlackRock and Goldman Sachs, have launched joint ventures with banks controlled by the CCP in exchange for direct access to China’s multi-trillion-dollar wealth management market;
- The JVs fall under Chinese law, requiring the ongoing approval of state bank regulators controlled by the CCP, giving Chairman Xi Jinping unprecedented leverage over Wall Street’s politically-influential management class; and
- Congress must act before the financial incentives offered by the JVs – billions of dollars in potential management fees – draws the CCP and Wall Street even into ever-closer collaboration, jeopardizing Congress’ ability to act freely and decisively in the interest of the American people (via campaign donations etc.).
This report builds upon CPA’s previous findings that highlight how Wall Street asset managers and index providers—like Vanguard, FTSE Russell, BlackRock, and MSCI—funnel U.S. investor capital into CCP-linked firms, including those sanctioned by the United States. Many of these Chinese enterprises have been sanctioned for egregious human rights abuses and critical equipment and technology transfers dedicated to the modernization of China’s People’s Liberation Army (PLA).
This new report follows CPA’s two prior reports on Vanguard and FTSE Russell, as well as BlackRock and MSCI, that detail how Wall Street asset managers and index providers funnel U.S. investor capital into companies linked to CCP firms that have been sanctioned by the U.S. government for human rights abuses and helping advance the lethality of the PLA.
CPA strongly supports four pieces of legislation introduced earlier this year by Congresswoman Victoria Spartz (R-IN-05) and Congressman Brad Sherman (D-CA-32) that would help mitigate key strategic, commercial, and national security threats posed by China to the American economy and financial markets. CPA likewise supports three bills introduced by Senator Rick Scott (R-FL) that would discipline Wall Street investments in China, including the legal exclusion of thousands of insidious Chinese “A-share” companies traded on our exchanges.
“One of the most vexing questions concerning the continued presence of U.S.-sanctioned and other malevolent Chinese companies in the investment products (e.g. Exchange-Traded Funds etc.) of America’s largest asset managers is: Why have they been so calloused, tenacious, malfeasant and defiant about holding the securities of these obvious corporate “bad actors”? This CPA report answers that question: It is to gain access to hundreds of millions of Chinese retail and institutional investors via joint ventures with Chinese state banks and online financial platforms like Alipay — but for a heavy price exacted by the CCP,” observed Roger Robinson, former Chairman of the Congressional U.S.-China Economic and Security Review Commission.
Justin Bernier, an advisor to CPA, said Wall Street’s joint ventures with the PRC’s largest state-owned banks give the CCP even more political influence inside Washington, D.C., where the Chinese government runs influence operations targeted against U.S. officials. According to the FBI, “the Chinese government is employing tactics that seek to influence lawmakers and public opinion to achieve policies that are more favorable to China.”
“U.S. investment firms have a long history of carrying water for Beijing on critical strategic issues ranging from trade policies to technology controls in exchange for market access to mainland China,” Bernier said. “Now that Wall Street has formed joint ventures with banks controlled by the CCP to sell investment products inside China, you can expect the financial industry to be even more supportive of Beijing’s agenda. The fact that Wall Street — arguably the most powerful lobby in Washington — is in business with banks owned and controlled by the Chinese government, an adversary known for its elite capture strategy, should be a red flag for Congress, U.S. regulators and federal law enforcement.”
# # #
