A congressional panel has launched probes into BlackRock and Morgan Stanley Capital International (MSCI), with lawmakers alleging their financial products facilitate American investment in Chinese companies that are involved in Beijing’s military buildup and human-rights abuses.

These companies include the Chinese-military-linked firms that produce artillery shells and materials for Beijing’s nuclear program, a genetic-surveillance firm that conducts research on ethnicities persecuted by the Chinese Communist Party, and firms that manufacture warships and aircraft for the People’s Liberation Army.

“It is unconscionable for any U.S. company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses,” wrote Representatives Mike Gallagher and Raja Krishnamoorthi, the chairman and the ranking member of the House Select Committee on the Chinese Communist Party, in letters to the CEOs of BlackRock and MSCI on Tuesday. “Americans are now unwittingly funding PRC companies that develop and build weapons for the People’s Liberation Army (PLA)—the PRC’s military—and advance the CCP’s stated mission of technological supremacy.”

The two U.S. financial powerhouses — BlackRock is the world’s largest asset manager, and MSCI provides stock indexes — have directed hundreds of millions of dollars of their clients’ funds to the blacklisted Chinese firms, the House panel said after conducting an analysis of the content of specific financial products offered by the two companies.

In statements on Tuesday, spokespeople for the firms emphasized that they are engaging in lawful behavior, and BlackRock pointed out that over a dozen other companies also offer investments in Chinese firms. “MSCI indexes measure the performance of equity markets available to international investors, and comply with all applicable U.S. laws. MSCI does not manage or recommend or facilitate investments in any country,” a spokesperson for the index company said.

But with growing awareness of China’s military aggression and the atrocities it has committed against ethnic minorities, these practices are getting a second look from Congress.

“The private sector is a — if not the — battleground for today’s great-power competition with China. And right now, the U.S. private sector risks not only not competing effectively with China but in fact fueling Beijing’s offensive,” said Emily de La Bruyère, the co-founder of Horizon Advisory, which has conducted extensive research on Chinese military–civil fusion. “Any effort to address that has to start with capital markets.”

Across five China-related funds that the committee’s staff investigated, BlackRock has invested over $429 million in more than 20 different entities on U.S. government blacklists, Gallagher and Krishnamoorthi wrote. They also found that five MSCI indexes altogether include more than 40 blacklisted Chinese firms, while BlackRock funds included more than 20 of the blacklisted firms.

Notably, one of these firms is BGI Genomics, a genetic-research company that the U.S. has placed on several of its blacklists for its role in atrocities committed against ethnic Uyghurs in Xinjiang. BGI has also carried out a surreptitious gene-harvesting program through prenatal tests offered worldwide, according to a Reuters report from 2021. Its experiments have used a military supercomputer to single out genes from Tibetan and Uyghur women and used monkeys to study the effects of altitude sickness in conjunction with a PLA lab, according to the report.

Gallagher and Krishnamoorthi also called out the inclusion of key players in China’s defense-industrial base, including subsidiaries of aircraft manufacturer AVIC, North Industries Group Arrow Company Limited, which produces artillery shells for the PLA, and a subsidiary of China State Shipbuilding Corporation that builds Chinese aircraft carriers.

Another Chinese firm included in BlackRock funds and MSCI indexes is a subsidiary of China Nuclear Power Group, which the Commerce Department accused of working to “acquire advanced U.S. nuclear technology and material for diversion to military uses in China.”

“U.S. capital is feeding Beijing’s technological development, surveillance state, military modernization, and efforts to hollow out the American industrial base — and Beijing is using capital to develop parasitic positions of leverage over the US,” said de La Bruyère, who is a senior fellow at the Foundation for Defense of Democracies. “This has to be recognized and resolved.”

Gallagher and Krishnamoorthi gave MSCI and BlackRock until August 14 to answer several questions about their indexes, provide lists of all blacklisted Chinese firms on their indexes, and hand over a detailed breakdown of the exposure of U.S. investors to the Chinese firms. BlackRock’s statement said that the company “will continue engaging with the Select Committee directly on the issues raised,” while MSCI’s spokesperson said that it will review the committee’s request for information.

The investigation addresses one channel of American investment flows to blacklisted Chinese firms, while U.S. officials are working to close several more, including the federal retirement-savings program, investments by nonprofit entities, and the venture-capital industry.