Five China Companies Wall Street Still Funds Despite Being Blacklisted

There are scores more, but it is not hard to find five of the biggest companies that face restrictions from doing business with American companies but not with Wall Street fund managers. Those guys get the green light.

American mutual fund giant Vanguard, a staple of every American 401(k), as well as exchange-traded fund products owned by Blackrock (known as iShares) and State Street (known as SPDR’s) are all invested in these five companies on the Commerce Department’s Entity List. American companies need permission to sell certain computer components to Entity List companies.

The list, managed by the Bureau of Industry and Security at Commerce, is not an investment ban. A Treasury Department list of Chinese defense contractors is intended to institute outright bans on investment in those companies. But if the Commerce Department’s goal is to stop the rise of these companies, then providing them billions of dollars of U.S. capital surely doesn’t help the cause.

Here are five companies with restricted access to U.S. technology, but unfettered access to U.S. capital.

ZTE Corp.

This telecommunications giant trades in Hong Kong and is owned by the SPDR Emerging Markets Portfolio ETF, DFA mutual funds, Vanguard and Blackrock’s emerging market iShares as of May 25, according to Morningstar.



If you own the Vanguard Total International Stock Index fund as part of your 401(k), you are invested in a rising star of China’s artificial intelligence.  AI is a new worry on Capitol Hill. Former Google chairman Eric Schmidt told the House Select Committee on the CCP earlier this month that China was “maybe a year or two behind the United States” in AI development and that China is moving fast to win the race in building AI platforms that the world will use. Think IBM cloud networks, for example, used the world over. China will be that for AI, especially in Asia. But Schmidt failed to connect the dots to the fact that it is the money – the investment – that these companies are getting from Wall Street that is driving their rapid progression and “catching up” to American innovation.


CGN Power Company

CGN Power is a holding company that owns a bunch of smaller companies engaged in the generation and sale of nuclear power; construction of nuclear power plants; operation and management of nuclear and non-nuclear related projects.  It shares trade in Hong Kong. It’s not just the usual suspects of Vanguard and Blackrock that own shares in CGN. A Morningstar Five Star rated mutual fund out of Pennsylvania, Kopernik Global All Cap (KGGIX) has over 168 million shares in CGN as of May 25, according to Morningstar.


Changhong Meiling Co

This refrigeration manufacturer is owned by the Vanguard Emerging Markets Equity (VEIEX) fund. Changhong is a classic example of the Chinese company forever changing its name. It was first put on the Entity List in July 2020 as Hefei Meiling Co. then they changed the name to Changhong Meiling Co. The company’s mainland China A-share securities abbreviation was changed from “Meiling Electric” to “Changhong Meiling”, and the company’s B-share securities abbreviation was changed. Changed from “Wanmeiling B” to “Hongmeiling B” to further confuse investors. The company was added to the Entity List because of forced labor issues.

Hoshine Silicon Industries

Hoshine makes polysilicon in Xinjiang, an early startup material for use in manufacturing semiconductors and solar cells. They are on Homeland’s Uyghur Forced Labor Prevention list because of forced labor. Both the Trump and Biden administrations have said that the Uyghur Muslims of Xinjiang are undergoing a “genocide.”  Wall Street firms are still allowed to send Hoshine money in the firm of share purchases. And many Americans own Hoshine in their mutual funds. Hoshine is in the Vanguard Emerging Markets Equity portfolio, the Vanguard Total International Stock Index fund (VGTSX), the iShare MSCI Core Emerging Markets ETF (IEMG), and the XTrackers China MSCI All China ET (CNYA) to name a few, according to Morningstar data.

Capitol Hill is catching on to this “gap” in U.S. sanctions policy, said Robby Smith Saunders, Vice President of National Security at CPA. CPA has submitted written and oral testimony to Congress calling for a law to “harmonize U.S. sanctions” whereby we are not simultaneously blocking some companies from exports because of human rights abuses and foreign policy concerns, yet we are allowing for ongoing capital flows by the hundreds of millions from American investors. Legislation introduced last Congress will soon be reintroduced in the House to tighten up the differences in the Entity Lists and make the lists’ punitive measures more effective and less murky for application. “We strongly support Congress expeditiously passing such measures and the executive branch to take seriously their need to implement the law without providing regulatory loopholes for companies to opt-out of as they did with the implementation of the Treasury list for Chinese military contractors,” Smith said.

Another company, Daqo New Energy (DQ) trades on the NYSE. It is a Variable Interest Entity (VIE) based in the Caymans, meaning DQ holders own shares in a holding company that invests in shares of the main company. “This is by design,” said Smith about VIE securities. “The CCP won’t let foreign investors hold and control their companies.”

Daqo owns polysilicon maker Xinjiang Daqo New Energy, which is on the Uyghur Forced Labor Prevention law’s Entity List. Daqo’s U.S. shares are owned by numerous major funds, including iShares ETFs, Vanguard mutual funds, Invesco, Fidelity, and Templeton renewable energy and emerging market funds as of May 25, according to Morningstar. 

OFilm Group, which manufactures optical lenses and other fingerprint ID systems used by the Xinjiang security apparatus, was once on the Commerce list but was removed last summer. Apple stopped working with OFilm at the time. But Vanguard Emerging Markets Stock Index, Vanguard Total International Stock Index, Invesco China Technology Fund (CQQQ), and DFA Emerging Markets Core Equity Fund (DFCEX) held tight to OFilm shares, and are still owners.


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On May 25, Senator Marco Rubio (R-FL) reintroduced the Taxpayers and Savers Protection (TSP) Act, a bipartisan, bicameral legislation that would ban the Federal Retirement Thrift Investment Board (FRTIB) from steering federal employee retirement funds in the Thrift Savings Plan (TSP) — the largest retirement fund in the world with $720 billion in assets — to China.

Sens. Rick Scott (R-FL), Joni Ernst (R-IA), Josh Hawley (R-MO) and Jeanne Shaheen (D-NH) reintroduced the TSP Act in the Senate. U.S. Representatives Michael Waltz (R-FL), Chrissy Houlahan (D-PA), John Rutherford (R-FL), Elise Stefanik (R-NY), Mike Gallagher (R-WI), and August Pfluger (R-TX) introduced the bill in the House.

CPA found that within the mix of the 5,000 different funds offered, at least 22 are China-only funds. The Federal Retirement Thrift Investment Board (FRTIB) has publicly admitted that it does not “evaluate or monitor any of the mutual funds to ensure that they are prudent investments” on behalf of TSP participants. These 22 funds do not carry any specific warnings for potential TSP investors.

Last August, CPA released data showing that five of the largest international funds in so-called “mutual fund window” of allowable financial products to choose from each had an average weight of 22 percent toward Chinese companies. Each fund had companies listed on the U.S. Department of Treasury’s list of Chinese Military-Industrial Companies, the Department of Commerce Entity List, the Commerce Department’s Unverified list, or the Department of Defense Chinese Military Companies list.

Companies have been placed on these lists because of issues ranging from technology theft, or are seen as helping oppress the Uyghur people in Xinjiang.  Despite those concerns, U.S. capital markets have been allowed to funnel money into these companies deemed bad actors by leadership in both parties.


CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.

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