Culture matters when thinking about China's future

globalguerrillas

China is in the process cracking down on democracy protesters in Hong Kong. 

It's important to remember that China is a dictatorship.  It's almost always been a dictatorship.  It also has a long history of extreme insularity and xenophobia.

That's why it's important to consider this when investing in Chinese companies.  

As a dictatorship, China can nationalize all assets and shut its borders tight overnight.  It's done it many times before.  

This isn't ancient history.  Forty years ago, this government engaged in ruthless social engineering that killed an estimated twenty million people.

This and more is why investments in China, in particular the amazing valuation given to Alibaba ($200 billion plus) is nonsensical given the potential downside risks ($0 valuation overnight).

In contrast, countries like the US have a long tradition of economic and personal freedom.  It's one of the best features of American culture.  

How many countries have demonstrated that for 200 years plus?  

Very, very few.

Culture matters.  Don't discount it.