Vanguard, BlackRock Funnel U.S. Investment to Chinese Shipyard that Built Third CCP Aircraft Carrier

Download the PDF of this briefing alert HERE.


As of June 2022, BlackRock, Vanguard, and other Wall Street financial firms are exploiting American investors and helping the Chinese Communist Party (CCP) build and modernize the Chinese military. Currently, these firms are offering Exchange Traded Funds (ETFs) and other investment products to U.S. investors that track indices containing Chinese companies building and modernizing the CCP’s military. For example, CSSC Holdings Ltd. was listed as a constituent of the following indices: MSCI Emerging Markets, MSCI ACWI, FTSE Emerging, and FTSE All-World. These indices are tracked by trillions of dollars of assets under management globally through associated ETFs. 

× PROBLEM: American investors, via ETFs and Mutual Funds, are actively funding Chinese entities that are modernizing China’s People’s Liberation Army (PLA) and Navy, and that have been sanctioned (or are linked to a company that has been) by the U.S. government for human rights abuses or national security risk. 

√ SOLUTION: Require transparency and disclosure from index providers and fund managers, and prohibit sanctioned and known bad actor Chinese companies from inclusion in indexes and investment products like ETFs and Mutual Funds. 


On June 17, 2022, The PLA Navy (PLAN) successfully launched its third aircraft carrier from Shanghai’s Jiangnan Shipyard. The new carrier enables China to launch a wider variety of aircraft and is reportedly equipped with technology furthering PLAN blue water naval capabilities. Jiangnan Shipyard, where the Fujian was built, is a commercial and naval shipbuilding facility. 

Jiangnan was wholly acquired in 2019 as a subsidiary of China State Shipbuilding Corporation Holdings Limited (CSSC Holdings Ltd.). CSSC Holdings Ltd. (SHA:600150) is the publicly-traded arm of China State Shipbuilding Corporation Ltd. (CSSC) (中国船舶工业集团有限公司), a Chinese state-owned enterprise carrying out shipbuilding and repairs for cargo customers and PLAN military vessels. CSSC is included in some of the world’s most prominent investment indices. Foreign capital flowing into Jiangnan Shipyard directly via its commercial business or indirectly via CSSC Holding Ltd securities may both directly and indirectly support PLAN modernization. 

Development of the PLAN’s fourth aircraft carrier is reportedly underway at Jiangnan shipyard, with the carrier’s launch expected between 2025 and 2027. 

CSSC was designated by the U.S. government as a Non-SDN Chinese Military Industrial Complex Company (NS-CMIC) on June 3, 2021. This listing, under Executive Order 13959 (as amended by President Biden in Executive Order 14032), prohibits U.S. persons from purchasing or selling any securities of companies deemed to be supporting China’s military-industrial base. This prohibition does not apply to subsidiaries, like CSSC Holding Ltd. or Jiangnan Shipyard, that are not also explicitly designated by the Treasury Department’s Office of Foreign Assets Control (OFAC). Correspondingly, CSSC was designated by the Department of Defense as a Chinese Military Company operating directly or indirectly in the United States by the Biden Administration in June 2021, in accordance with the FY21 NDAA’s section 1260H. 


  • 2003: State-run China Daily reports the development of PRC government preferential policies to “support” fundraising for the shipbuilding industry via capital market instruments like bond placements or public offerings. 
  • 2007: PRC government releases guidelines enabling the defense industry to utilize capital markets.
  • 2007: CSSC announces plans for Hong Kong initial public offering sponsored by JPMorgan. ● 2009: CSSC issues first bond on interbank bond market. 
  • 2015: Researchers find CSSC Holdings has raised a total of $8.63 billion from the debt markets and $3.02 billion from equity sales. 
  • 2016: Reports emerge that construction of the Type-003 Fujian aircraft carrier has begun at CSSC’s Jiangnan Shipyard. 


As of June 2022, CSSC Holdings Ltd. was listed as a constituent of the MSCI Emerging Markets, MSCI ACWI, FTSE Emerging, and FTSE All-World indices. These indices are tracked by trillions of dollars of assets under management globally, for example, through the associated Exchange-traded funds (ETFs). The primary ETF providers include Blackrock’s iShares products and Vanguard’s UCITS products, respectively. 

In addition to issuing yuan-bonds, as of 2015, the CSSC corporate family has raised nearly $2.6 billion through euro and dollar-denominated debt placement via markets such as the US Over-the-Counter market, Frankfurt, and Bank Sarasin (Switzerland) markets and JP Morgan bond-focused ETFs, among other debt markets. Nearly all of which were underwritten by Western banks, most commonly Barclays and Société Générale. Four of CSSC’s euro- and dollar-bonds have yet to mature, and more can be found on them by viewing the PDF link to our briefing sheet on this important topic. 


Congress has the ability to improve U.S. sanctions policy, and transparency, disclosure, and due-diligence requirements for Wall Street and the financial sector. CPA supports efforts to close loopholes in U.S. sanctions policy through sanctions harmonization legislation, and also calls on the Biden administration to expand the annex of EO 13959 (as amended by EO 14032) and its scope of covered entities. In order to avert a war with China, the U.S. must take economic statecraft seriously and use the tools we have to stop funding our leading adversary’s military modernization. 

Our research illuminates the financing flowing to key Chinese military industrial complex companies via Wall Street’s indices and the funds they track. While the U.S. supports its own military, it is beyond time we change our posture toward what our businesses are doing overseas, and who and what lay and institutional investors are financing. 


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