Investment giant BlackRock on Wednesday defended itself from criticism from billionaire financier George Soros, who took exception to its approach to investing in China.

In a Wall Street Journal op-ed on Tuesday, Soros called an initiative by BlackRock to expand its investment services in China a "tragic mistake" that was damaging to the national security of the U.S. and its democratic allies. Soros warned that by pouring more billions into China, BlackRock was making a "bad investment."

BlackRock, the largest manager of assets globally, defended its services as increasing the economic inter-connectivity between the world’s two largest economies. A BlackRock spokesperson told CNBC that its subsidiary in China revolved around meeting retirement needs of U.S. and other international customers who seek the best financial returns for their pensions.

“We believe that globally integrated financial markets provide people, companies, and governments in all countries with better and more efficient access to capital that supports economic growth around the world,” the spokesperson said.

BlackRock has remained insistent on maintaining its investments in China despite fear among other investors about a regulatory crackdown in Beijing. For weeks, Beijing has rolled out tough new regulations on antitrust enforcement, data security and foreign involvement in certain sectors of the economy. The crackdown has been linked to President Xi Jinping’s “common prosperity” agenda which has taken aim at the excess incomes of the Chinese elite and pushed for redistributing wealth throughout the economy.

In an interview with the Financial Times, BlackRock's lead investment strategist Wei Li called China "underrepresented" in global portfolios and benchmarks despite the size of its capital markets. BlackRock is the first foreign asset manager granted permission to solely fund a mutual fund business in China, an outlier amidst the wider clampdown, which sparked Soros’ criticism.

CEO Larry Fink described the Chinese market as a “significant opportunity to help meet the long-term goals of investors in China and internationally.”

In 1993, Soros found the pro-democracy Open Society Foundation, which has rankled authoritarian countries worldwide. He is a frequent critic of China.

In an op-ed in the Financial Times on Aug. 30, Soros warned that investors may be ignoring the risks that include Xi’s growing authoritarianism, the consequences of his regulatory push, China’s demographic challenges of an aging population, and the bloat of overleveraged firms like real estate firm Evergrande.

The financier urged Congress to pass new regulations that would require asset managers to invest in companies that had governance structures that are both transparent and aligned with stakeholders. Soros also cautioned investors about being too optimistic about embracing Chinese reassurances that blind them to the developing risks coming from China.

“They have seen China confront many difficulties and always come through with flying colours. But Xi’s China is not the China they know,” he said.

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