I’ve been thinking that we don’t really grasp Asia in relation to Europe and the United States. Even though Europe and the United States are rich and powerful, the world’s demographic center of gravity is in Asia.
Trump’s desire to change the world order, viewed from our “Western bubble,” is in a way logical but at the same time dangerous, because outside our bubble, things are seen differently. China does not pursue Western values but wants to prosper and accumulate power in its own way.
China is unlikely to significantly change its ways because of Trump’s trade war. Some fine-tuning and concessions will probably come, but I don’t believe the main direction will change. So, in the future, we need to learn to live better with their ways.
One thing that bothers me is exchange rates and their impact on statistics. This became very clear elsewhere on the forum, where Japan’s standard of living was only slightly higher than Estonia’s due to the weak yen. The same applies to China; statistics show the country as “poorer” than it “really” is.
Even when I visited the country, I noticed that the price level was very affordable, too affordable to be true when considering the quality level. In many respects, the absolute quality was clearly ahead of the West, and yet the price level was very low. For example, transportation: the train was a modern 350 km/h high-speed train, the metro was functional, very clean and modern, or the taxi was a new electric car. Yet the prices of tickets/journeys were significantly more affordable than in the West. (Compare, for example, to the United States, where trains are like from a museum, the New York subway is downright subpar as an experience, and taxis are not worth cheering for in terms of quality. The price level is something completely different from China).
The point of my long post is that China’s economy is actually larger than its size, largely due to exchange rates. They use different means than we do to prosper; some of these means are strange to us, some are very unfair or dishonest. Time will tell how such methods, which differ from ours, will yield results.
From an investor’s perspective, the essential question is, does China really even want to enrich stock investors (especially foreign ones)? In our own bubble, this is self-evident, but China’s rules of the game can be quite different in this regard. If this desire is not present, there is a risk that in a so-called tight spot, the interests of shareholders will not be cared for.
I myself am cautious precisely about property rights and the consideration of investors’ interests, and for that reason, I do not invest directly in Chinese stocks. I don’t believe in a development quite like Russia’s, but even the trampling of investors’ interests can have an unpleasant effect on investment returns.
