A US government commission has called for tighter controls on flows to China’s capital markets in a move that, if approved, would have profound implications for asset managers and index providers.

The latest annual report from the US-China Economic Security Review Commission highlighted security concerns from a huge rise in US investment. “A surge of US investor participation in China’s markets is outpacing the US government’s defence against the diverse threats to US national and economic security posed by US investment in some problematic Chinese companies,” the report to Congress said.

“Despite ongoing US-China tensions, US investors, asset managers and mutual funds are increasing their participation in China’s financial markets,” it added.