China

[Spekulatius]

5 hours ago, Parsad said:

 

The Chinese bank won't release the funds.  We attempted numerous ways with advice from Chinese and HK experts after several attempts to just withdraw the funds and transfer to our HK bank account were declined.

 

A couple of examples:

• We've tried to produce invoices from here to indicate there are expenses paid in Canada that are owed by the Chinese subidiary...the bank declined saying that the Chinese government was restricting the withdrawal.  
• We tried to sell the subsidiary to our general manager, in turn he would transfer ownership of his HK company to us with equivalent cash...wouldn't let the Chinese transfer occur.
• Tried to sell to another Chinese company...they demanded audited financial statements...which we produced.  Still declined the transaction.

Six bloody years and still no way to get at the funds!  And people want to invest in China!  Cheers!

Currency movements in China are not free and need approval from ministries. The Yuan is not freely convertible into other currencies in large volumes either.

 

China is a bit like a roach motel, you can get money in easily but getting it out can be quite difficult. I suspect quite a bit of cash from international companies is trapped in China.

[Luke]

 

David Tepper doesnt seem to think there is a lot of risk with China, Nvidia with 400m, 400m in Baba, 200m in TSMC, 200m in Baidu, 70m in JD.com, 60m in ASML, KWEB and China Largecap etc...

Edited September 2, 2023 by Luca

[SharperDingaan]

18 hours ago, Parsad said:

 

The Chinese bank won't release the funds.  We attempted numerous ways with advice from Chinese and HK experts after several attempts to just withdraw the funds and transfer to our HK bank account were declined.

 

There is a reason why BTC is so heavily controlled in China, and why Binance is under such tight control (& mistrusted). Talk to your Lebanese/Iranian/African friends.

 

SD  

[Parsad]

15 hours ago, Luca said:

 

David Tepper doesnt seem to think there is a lot of risk with China, Nvidia with 400m, 400m in Baba, 200m in TSMC, 200m in Baidu, 70m in JD.com, 60m in ASML, KWEB and China Largecap etc...

 

Well there are people invested in Rwanda, Iran and North Korea.  There are people who collect cheeses, wine and cigars.  I know a guy who invests in old typewriters.  Tepper investing in China is of no more significance than them.  Cheers!

[Luke]

17 hours ago, SharperDingaan said:

 

There is a reason why BTC is so heavily controlled in China, and why Binance is under such tight control (& mistrusted). Talk to your Lebanese/Iranian/African friends.

 

SD  

To me that makes a lot of sense, economy and state are always intertwined, people and business can't just do whatever they want.

[james22]

7 hours ago, Luca said:

To me that makes a lot of sense, economy and state are always intertwined, people and business can't just do whatever they want.

 

Why not?

[Luke]

1 hour ago, james22 said:

Why not?

Because they can harm societal development, food companies in Mexico as an example, huge obesity problems etc. A movement by doctors pressured the government to install warning labels etc on Coke and Soda. There are many examples and currency is just another one, living in a society together requires individuals to cooperate. 

 

I think investing in asia generally requires the knowledge of mentality difference compared to the west, individuals dont matter as much as the collective does. Thats the Jack Ma vs CCP story. This comment was quite nice from VIC and highlights the massive bias some investors have: 

 

 

 

[Luke]

15 hours ago, Parsad said:

 

Well there are people invested in Rwanda, Iran and North Korea.  There are people who collect cheeses, wine and cigars.  I know a guy who invests in old typewriters.  Tepper investing in China is of no more significance than them.  Cheers!

David Tepper having big positions in China has the same level of significance on an investing level as a guy you know who invests in typewriters? I have to disagree. 

[RichardGibbons]

2 minutes ago, Luca said:

Because they can harm societal development, food companies in Mexico as an example, huge obesity problems etc.

 

 

Do you view the CCP committing genocide against the Uyghurs and grinding peaceful protesters to a pulp beneath the treads of tanks as harmful to societal development?

 

I suspect not, because the CCP said this was a good idea, right?

[james22]

15 minutes ago, RichardGibbons said:

Do you view the CCP committing genocide against the Uyghurs and grinding peaceful protesters to a pulp beneath the treads of tanks as harmful to societal development?

 

"You can't make an omelette without breaking eggs," Richard.

[Luke]

34 minutes ago, RichardGibbons said:

Do you view the CCP committing genocide against the Uyghurs and grinding peaceful protesters to a pulp beneath the treads of tanks as harmful to societal development?

Well, they think that it somehow strengthens their society at least there are reports about such a motive, but I also don't have any insider information on these camps, information also is limited. People who fled obviously report torture rape etc, it's hugely problematic indeed. 

34 minutes ago, RichardGibbons said:

I suspect not, because the CCP said this was a good idea, right?

I said many times that they do mistakes, some severe ones too. 

[no_free_lunch]

Since we are investors, I just look at things from that perspective.  Is there really a history of profits made in China by investors?  If I look at something like the ETF FXI, I have to go prior to 2005 to get to a profitable investment.  This, in spite of huge growth of the Chinese economy during that period. If economic growth doesn't translate through to shareholders, why bother.  Is there a real argument for profitably investing in China?  I haven't run the numbers, is it just that the PE is much more compressed?

[no_free_lunch]

Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years.  All to silence some blue collar workers.  Not so democratic, not so liberal.  You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too.  From my perspective, it's similar, just different degrees of authoritarianism.  China might kill you, in Canada the most they will do is take your job if you oppose them.  For the average joe either option is catastrophic.

[Luke]

1 minute ago, no_free_lunch said:

Since we are investors, I just look at things from that perspective.  Is there really a history of profits made in China by investors?  If I look at something like the ETF FXI, I have to go prior to 2005 to get to a profitable investment.  This, in spite of huge growth of the Chinese economy during that period. If economic growth doesn't translate through to shareholders, why bother.  Is there a real argument for profitably investing in China?  I haven't run the numbers, is it just that the PE is much more compressed?

I have posted comparisons to the DAX as an example, it doesn't look that bad and consider that the Hang Seng index is very cheap right now. There have also been many 100x baggers and many investors outperformed hard in china (David Webb).

[Luke]

31 minutes ago, no_free_lunch said:

Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years.  All to silence some blue collar workers.  Not so democratic, not so liberal.  You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too.  From my perspective, it's similar, just different degrees of authoritarianism.  China might kill you, in Canada the most they will do is take your job if you oppose them.  For the average joe either option is catastrophic.

Exactly, you have corruption and abuse on both sides, in the US some black communities are so disregarded and poor, the insane isolation sentences, prisons filled to the max, worker abuse etc. I don't think Chinas Government is great per se, the party developed their country on a speed that is insane and they lifted a lot of people out of poverty, nice! Many regulations I also do approve of. Now what about investing? The CCP and Xi wants China to grow, they want those poor people in the countryside and underdeveloped regions to climb the ladder and get wealthy, they want to be respected worldwide, make up for the century of humiliation. On a per capita basis they are still very much behind of the west, LOTS of development left. Huge and attractive market despite short term problems and also very cheap valuations. 

[RichardGibbons]

2 hours ago, no_free_lunch said:

Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years.  All to silence some blue collar workers.  Not so democratic, not so liberal.  You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too.  From my perspective, it's similar, just different degrees of authoritarianism.  China might kill you, in Canada the most they will do is take your job if you oppose them.  For the average joe either option is catastrophic.

 

I don't scoff at it at all.  I think it's atrocious. The government has effectively said, "Because you publicly disagree with our policies, we're going to take away your ability to feed your family."  This is a huge overreach by the government. So, I think my opinion matches yours on that issue (or maybe I'm actually more extreme than you on the Emergency Act invocation. I'm against it to an extreme degree.)

 

On the vaccine mandates, I'm on the fence. I think there shouldn't be mandates outside healthcare, but I'm on the fence whether a healthcare worker should have the option of not using proven prophylactic measures.  (Like, should they have the option of not washing their hands or not wearing masks during a surgery?) I think I probably settle on exactly how proven the "proven" measures are.

 

I believe in liberal values, but there's no doubt that the Trudeau government is authoritarian and very far away from liberal values. I think there's a reasonable chance that because of this government, I'll never again vote for the Liberal Party of Canada.

 

(I really didn't like Harper because of his anti-science stance. But now I wish I could vote for him today.)

Edited September 4, 2023 by RichardGibbons

[RichardGibbons]

2 hours ago, Luca said:

Exactly, you have corruption and abuse on both sides

 

Yeah. But, the corruption and abuse on the Chinese side is at least an order of magnitude (and maybe two) worse that the that in the "free" world.  You might want to "both sides" it, but the CCP is obviously much more evil, just like the Nazis, Khymer Rouge, and Soviets were evil.

 

The kid who shoplifted the chocolate bar from the store was a criminal, and so was Jeffrey Dahmer.  Really, both of those two were criminal.  Just like poverty in the US and running people over with tanks are basically the same thing.

[no_free_lunch]

1 hour ago, RichardGibbons said:

 

I don't scoff at it at all.  I think it's atrocious. The government has effectively said, "Because you publicly disagree with our policies, we're going to take away your ability to feed your family."  This is a huge overreach by the government. So, I think my opinion matches yours on that issue (or maybe I'm actually more extreme than you on the Emergency Act invocation. I'm against it to an extreme degree.)

 

On the vaccine mandates, I'm on the fence. I think there shouldn't be mandates outside healthcare, but I'm on the fence whether a healthcare worker should have the option of not using proven prophylactic measures.  (Like, should they have the option of not washing their hands or not wearing masks during a surgery?) I think I probably settle on exactly how proven the "proven" measures are.

 

I believe in liberal values, but there's no doubt that the Trudeau government is authoritarian and very far away from liberal values. I think there's a reasonable chance that because of this government, I'll never again vote for the Liberal Party of Canada.

 

(I really didn't like Harper because of his anti-science stance. But now I wish I could vote for him today.)

 

Apologies.  This is certainly a nuanced and balanced approach.  It gives me hope.  It is important that the west maintain some sort of moral consistency and the events of the last couple years really shook my belief in that.  However, I do see more and more questioning the politicians and their motives and as long as that is the approach I hope things will turn out ok in the end.

 

 

[RichardGibbons]

2 hours ago, no_free_lunch said:

 

Apologies.  This is certainly a nuanced and balanced approach.  It gives me hope.  It is important that the west maintain some sort of moral consistency and the events of the last couple years really shook my belief in that.  However, I do see more and more questioning the politicians and their motives and as long as that is the approach I hope things will turn out ok in the end.

 

 

 

No big deal, I didn't take it the wrong way.

 

I think the big problem with North American politics now is that countries prosper when there is high social cohesion--when everyone shares a common broad vision and everyone tries to act in good faith to achieve that vision.

 

Politicians and media, however, seem to believe that destroying social cohesion is good for their careers. They seem to want wedge issues, polarization, and villainization of their political enemies because it leads to engagement.

 

The problem is, I suspect if you destroy social cohesion, you also destroy democracy.

[Parsad]

8 hours ago, Luca said:

David Tepper having big positions in China has the same level of significance on an investing level as a guy you know who invests in typewriters? I have to disagree. 

 

You're right.  The guy investing in typewriters is not exposed to political or property rights risk.  

 

My point is that there is absolutely zero need for an investor to accept political or property risk by investing in China.  You can do perfectly fine in North America by just being patient and waiting for fat pitches. 

 

Especially if you are managing less than $150B!  I'm guessing most people are.  Cheers! 

[Parsad]

4 hours ago, RichardGibbons said:

 

I don't scoff at it at all.  I think it's atrocious. The government has effectively said, "Because you publicly disagree with our policies, we're going to take away your ability to feed your family."  This is a huge overreach by the government. So, I think my opinion matches yours on that issue (or maybe I'm actually more extreme than you on the Emergency Act invocation. I'm against it to an extreme degree.)

 

On the vaccine mandates, I'm on the fence. I think there shouldn't be mandates outside healthcare, but I'm on the fence whether a healthcare worker should have the option of not using proven prophylactic measures.  (Like, should they have the option of not washing their hands or not wearing masks during a surgery?) I think I probably settle on exactly how proven the "proven" measures are.

 

I believe in liberal values, but there's no doubt that the Trudeau government is authoritarian and very far away from liberal values. I think there's a reasonable chance that because of this government, I'll never again vote for the Liberal Party of Canada.

 

(I really didn't like Harper because of his anti-science stance. But now I wish I could vote for him today.)

 

The irony...I voted for Harper's 2nd term and didn't vote for Trudeau's 2nd term.  Not that I think the Trudeau administration is authoritarian, but the leader is a hypocrite.  Frickin' blackface while he was a teacher pissed me off!  If Harper did that, he would have been considered to be Trump!    I'm inclined to vote Conservative in the next election, but the candidates suck just as much as Trudeau! 

 

Frankly, I was very pleased with the NDP Horgan government at the provincial level and even David Eby has done a great job so far as Premier (and he was considered extremely left-wing, but has proven to be more of a centrist).  Unfortunately, the Federal NDP is far left...so can't vote for them!  Cheers!

[Luke]

8 hours ago, RichardGibbons said:

Yeah. But, the corruption and abuse on the Chinese side is at least an order of magnitude (and maybe two) worse that the that in the "free" world.  You might want to "both sides" it, but the CCP is obviously much more evil, just like the Nazis, Khymer Rouge, and Soviets were evil.

 

The kid who shoplifted the chocolate bar from the store was a criminal, and so was Jeffrey Dahmer.  Really, both of those two were criminal.  Just like poverty in the US and running people over with tanks are basically the same thing.

In China a minority population receives control, imprisonment, reeducation and are suspects without having done anything.

 

In the US, you have neighborhoods filled with poverty (that frankly nobody in the government cares about), racism and institutional violence against blacks etc. They get put into torturous isolation cells in breach of international law for which many politicians vote for. 

 

https://www.amnesty.org/en/latest/news/2014/07/usa-prisoners-held-extreme-solitary-confinement-breach-international-law/

 

“You cannot overestimate the devastating impact long periods of solitary confinement can have on the mental and physical well-being of a prisoner. Such harsh treatment is happening as a daily practice in the US, and it is in breach of international law,” said Erika Guevara-Rosas, Amnesty International’s Americas Director.

 

Those are very similar things and we still invest in the US. 

 

"Another technique is needed for those that you don’t have any use for, whose jobs you can more easily send out to Mexico. That gives you a superfluous class, and they have to be controlled in another way, sometimes by social cleansing, sometimes by incarceration. So the attention on crime certainly serves a purpose. It’s striking that the U.S. is perhaps the only society in which crime is considered a political issue. Politicians have to take a stand on who’s tougher on crime. In most parts of the world it’s a social problem. It’s not something you fight about at elections."

 

"It’s one thing to read the figures about poverty in India and another thing to walk through the slums in Bombay and see people living in hideous, indescribable poverty. If you walk through downtown Boston you also see appalling poverty. I’ve seen things in New York which are as horrifying as anything I’ve seen in the Third World. But I’d say that there are parts of New York or Boston which are not unlike what you find in the Third World. Black males in Harlem, it was discovered a couple of years ago, have roughly the mortality rate of Bangladesh."

 

 

Long Story short: Does this matter to me as an investor in the US? ABSOLUTELY NOT

You will find horror on both sides, you will find bad things on both sides in history too.

Edited September 4, 2023 by Luca

[Luke]

4 hours ago, Parsad said:

My point is that there is absolutely zero need for an investor to accept political or property risk by investing in China.  You can do perfectly fine in North America by just being patient and waiting for fat pitches. 

 

Especially if you are managing less than $150B!  I'm guessing most people are.  Cheers! 

Agree on that :)!

[Luke]

Good comments from Current Affairs regarding geopolitics: 

 

“China is our enemy,” Donald Trump declared repeatedly. “These are our enemies. These are not people who understand niceness.” Accordingly, when Trump was in office, his administration “took a sledgehammer” to U.S.-China relations, which “reached their lowest point in decades.” Trump officials spoke of China using the most hysterical imaginable McCarthyite language. Secretary of State Mike Pompeo said the “threat from the CCP” was “inside the gates” and could be found in “Des Moines and Phoenix and Tallahassee… [The CCP] will stop at nothing to undermine the very way of life we have here in America and in the West.” Steve Bannon wrote, “China has emerged as the greatest economic and national security threat the United States has ever faced.” FBI director Christopher Wray warned in July 2020 that “the Chinese threat” endangered “our health, our livelihoods, and our security.”

 

What, precisely, is China attempting to do that endangers the “way of life we have here”? Wray explained that “the scope of the Chinese government’s ambition” is nothing less than “to surpass our country in economic and technological leadership.” William Barr warned China was engaged in an “economic blitzkrieg,” which would see it ascend to the “commanding heights of the global economy and to surpass the United States as the world’s preeminent technological superpower.” Here we have a hint as to the true nature of the “China threat”: it is the threat that the United States will no longer rule the world. A basic premise of our foreign policy is that we are fully entitled to do so indefinitely.

 

This becomes explicit in the Trump administration’s strategy documents. The 2017 National Security Strategy (NSS) warns that “China seeks to displace the United States in the Indo-Pacific region, expand the reaches of its state-driven economic model, and reorder the region in its favor.” One might ask how the United States—which is not located in the Indo-Pacific region—could be “displaced” there, but the NSS does not touch on the question of why the United States, rather than the much more populous country of China, is entitled to dominance in Asia. China and Russia, says the NSS, are “contesting our geopolitical advantages” and we are locked into a “great power competition.” This also means we must “restore the readiness of our forces for major war” by drastically increasing the capacity of our military to annihilate large numbers of human beings quickly. The NSS recommends we “overmatch” the “lethality” of all the world’s other armed forces in order to “ensure that America’s sons and daughters will never be in a fair fight.”

 

The Trump administration’s “Strategic Framework for the Indo-Pacific” explains that one of the U.S.’s top interests in the Indo-Pacific is to “maintain U.S. primacy” and sustain “diplomatic, economic, and military preeminence in the fastest-growing region of the world,” so that China does not develop a new “sphere of influence.” In other words, we have to make sure that the largest Asian country does not have more power and influence in Asia than the much smaller United States.

 

“The policies are converging,” according to Stephen E. Biegun, who served as deputy secretary of state in the Trump administration. In fact, the present course was initiated by Barack Obama’s “pivot to Asia,” which promised among other things to “prioritize[] Asia for our most advanced military capabilities.” Obama declared “the United States is a Pacific power, and we are here to stay.”

 

After the Chinese Revolution in 1949, American politicians began debating the “loss of China,” with accusations flying back and forth as to who “lost” it. The terminology contains a tacit assumption that the U.S. owned China and it was ours to lose. The idea of China being out of our control was horrifying. Today, the United States is attempting to prove that China has no hopes of becoming a regional hegemon in its own backyard, using a “military-first” approach. The U.S., U.K., and Australia have announced they “will co-operate on the development of hypersonic weapons, expanding a trilateral security pact designed to help Washington and its allies counter China’s rapid military expansion.” 

 

And as Michael Klare observes, the 2022 National Defense Authorization Act “provides a detailed blueprint for surrounding China with a potentially suffocating network of US bases, military forces, and increasingly militarized partner states… to enable Washington to barricade that country’s military inside its own territory and potentially cripple its economy in any future crisis.” The Department of Defense tells us that “Beijing views the United States as increasingly determined to contain the PRC.” Since our Indo-Pacific policy is built explicitly around containing the PRC, it should not be surprising that Beijing feels that way.

 

Those who characterize China as a threat can immediately produce a substantial list of its misdeeds to justify the charge. There are of course serious human rights abuses in China, including its suppression of dissent and the repression of the Uyghur population. It has unquestionably violated international law in the South China Sea. Trump’s National Intelligence Director (NID) John Ratcliffe said China “robs U.S. companies of their intellectual property, replicates the technology and then replaces the U.S. firms in the global marketplace.” A July 2022 NID report warns of sinister Chinese influence efforts “to expand support for PRC interests among state and local leaders [in the United States] and to use these relationships to pressure Washington for policies friendlier to Beijing.” The Trump administration, at the urging of Chuck Schumer, formally labeled China a “currency manipulator.” William Barr said China practices “modern-day colonialism” in its “foreign aid” infrastructure initiatives by “loading poor countries up with debt, refusing to renegotiate terms, and then taking control of the infrastructure itself.”

 

The problem with the list of charges, however, is that they either plainly pose no threat to the United States or are actions we ourselves claim the right to engage in."

Edited September 4, 2023 by Luca

[Luke]

"The problem with the list of charges, however, is that they either plainly pose no threat to the United States or are actions we ourselves claim the right to engage in.

 

For instance, the evidence of China’s hideous mistreatment of the Uyghurs is compelling. But it is difficult to see how the Uyghur repression makes China a threat. By the same reasoning, Saudi Arabia’s war crimes in Yemen make it a threat to the U.S.. Furthermore, the United States plainly has no problem with the violation of human rights. It all depends on the perpetrator. While Biden has signed a bill punishing China for its repression of Uyghurs, he is happy to fist-bump a dictator and sell hundreds of millions of dollars worth of weapons to Israel to continue penning Gazans in an open-air prison and murdering Palestinian children. The U.S. could easily put a stop to the cruelty against Palestinians, but Biden saves his criticism for those who would point out the existence of apartheid (such as, for instance, leading Israeli human rights group B’Tselem)"

 

Some charges against China are exaggerated, like the idea of its neo-colonial “debt trap.” (Some international debt traps are quite real, however.) Others might as well be lists of events in American history. As the AP notes, to charge China with intellectual property theft is to condemn “the very sort of illicit practices that helped America leapfrog European rivals two centuries ago and emerge as an industrial giant.” Alexander Hamilton, whose life is celebrated in a popular patriotic musical, advocated “a federal program to engage in industrial theft from other countries on a grand scale.” Peter Andreas, author of Smuggler Nation: How Illicit Trade Made America, notes that “only after becoming the leading industrial power did [the U.S.] become a champion of intellectual-property protections.” Similarly, our condemnations of economic warfare and influence campaigns ring hollow, given that the United States exercises its economic power through possession of the global reserve currency and the CIA is quite open about conducting influence operations abroad. 

 

China is simply rejecting the principle that we are allowed to “kick away the ladder,” by which countries climb the ladder of development through whatever unscrupulous means they please—including violence, deceit, and the theft of higher technology—and then impose a “rules-based order” to prohibit others from doing the same.

 

It is worth asking: If China is a threat to us because it is establishing military installations in the South China Sea, then what are we to China? When China established its first overseas military base—in Djibouti—it was treated as part of a plan to “shift global power dynamics, eroding US dominance, and relegating Europe to the sidelines of international affairs.” What, then, should China make of our own 750 overseas bases across 80 nations? Are they innocuous and defensive, or an insidious effort to shape the world to serve our interests? When China reached a security agreement with the tiny Solomon Islands, raising the possibility of its opening a second overseas base, the United States immediately began to “turn the screws” on the Solomon Islands, in what Chinese officials (accurately) called an “attempt to revive the Monroe Doctrine in the South Pacific.” China scholar Lyle Goldstein, having reviewed a series of official articles called China’s Atlantic Strategy, says that “one of the things they said very clearly was ‘The Atlantic is absolutely critical to the United States, and the United States is coming to our backyard and poking around in the South China Sea, so we have to go to their backyard.’” Is turnabout fair play, or do the rules only apply to our competitors? For instance, China has indeed violated the UN Convention on the Law of the Sea. But the United States hasn’t even signed the convention. China’s actions toward Taiwan are menacing. But the United States has claimed the right to depose governments around the world. To talk of our deep concern for human rights as we starve the people of Afghanistan is perverse.