In the Market: Funds fret over the fallout of Biden's China order

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Fund managers are worried the Biden administration's move to restrict some outbound U.S. investment to China will further fuel anti-Beijing sentiment in Washington and prompt more limitations.

For U.S. investors trying to navigate the geopolitics, the noise in Washington is making it hard to determine what they should be doing in China. The executive order along with anti-China moves by lawmakers and agencies means the overall policy is unclear and riddled with landmines. China is making it harder for businesses, too.

This person, who requested anonymity because of the sensitivity of the situation, described the environment from business perspective as "a combination of confusion and fear," with policy debates expressed by "punching companies in the nose."Take the case last week of letters excoriating Blackrock and MSCI from the Select Committee on the Chinese Communist Party.

That's narrow enough for many fund managers to keep operating in China without any impact, top executives from two major firms with China business said. But if restrictions were to broaden it would be a different story. The former diplomat and the fund executive said they felt Blackrock had been singled out because launching an investigation into the world's largest asset manager would garner more publicity for the committee's work.

A similar measure, which includes more investment areas but doesn't call for prohibition, is moving through Congress. The former diplomat and one fund executive who monitors legislation said that might now stall.

 

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