BlackRock Exceptionalism in the Geopolitics of Proxy Voting

Within the context of the U.S.-China trade conflict, U.S. mutual fund investment in
Chinese companies has been subject to stricter national security scrutiny; however, little is known
about how these funds vote in Chinese companies. This study provides the first empirical
analysis of U.S. mutual fund proxy voting in Chinese companies. It finds that BlackRock lends
strong support to Chinese Communist Party (CCP)-initiated governance reforms that strengthen
the CCP’s control over Chinese companies—reforms that Vanguard and State Street largely
oppose in line with major proxy advisors’ recommendations. Analyzing 24,556 fund-firm voting
instances from January 2018 to June 2022, this study shows that proxy advisor recommendations
are the strongest determinant of fund votes, with funds more likely to support in-house CCP
committees in state-owned and large firms.

BlackRock’s voting pattern raises pressing questions about its stewardship responsibilities
to U.S. beneficial owners. Event study reveals that the adoption of CCP-related charter
provisions reduced firm value, suggesting BlackRock prioritized political allegiance to the CCP
over shareholder interests. The timing of these supportive votes coincided with BlackRock’s
pursuit and eventual acquisition of the first wholly foreign-owned asset management license in
China, echoing concerns about distorted incentives familiar from the U.S. context. By
instrumentalizing proxy voting as a tool of political signaling, BlackRock diverged from peer
funds and major proxy advisors. Situating these dynamics within broader geopolitical tensions,
this paper advances understanding of the governance role of global asset managers and
highlights important normative questions about asset manager stewardship amid an increasingly
politicized corporate environment.