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Exclusive | In windfall for Xinjiang, huge US mutual funds invest millions in its companies
- Vanguard’s investments in Xinjiang have tripled since 2018, records show, despite a US crackdown on trade in the region and warnings to businesses to stay away
- American mutual funds have used shareholder status to endorse company ‘poverty alleviation’ activities targeting region’s Uygurs and other minorities
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Earlier this month, after US President Joe Biden expanded a Trump-era ban on investments in companies linked to China’s state security apparatus, the White House declared that it would “not hesitate” to block US capital from flowing to certain parts of China’s economy if they threaten human rights and US national security.
The 59 blacklisted corporations include Chinese oil companies, aerospace firms and telecommunications giants, part of a broader crackdown in Washington that increasingly sees American businesses as complicit in China’s human rights abuses.
Yet even if giant US mutual funds like Vanguard, State Street and BlackRock – all heavily invested in China’s economy – move quickly to comply with Biden’s order, their investments in an entirely separate group of Chinese firms could come under scrutiny next: the millions of shares they own in companies based in Xinjiang, the far-west Chinese region where Washington and others accuse Beijing of committing genocide against the Uygur ethnic group.
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An extensive search of publicly available US and Chinese corporate records by the South China Morning Post found that these three mutual fund companies, the biggest in the US and trusted by many Americans to manage their savings and pensions, have collectively poured millions of dollars into Xinjiang’s publicly traded companies in recent years, many of them directly controlled by the Xinjiang government itself.
In particular, Vanguard has seen the value of its Xinjiang investments triple since 2018, according to US Securities and Exchange Commission (SEC) filings. They were worth more than US$150 million at the end of the first quarter of this year.
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A Post search of SEC public records also found that some Xinjiang companies are included in US funds specially marketed to ethically conscious investors – known as “ESG” funds, for environmental, social and corporate governance.
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