Oh man, its gonna be hard to keep this answer short haha. I think there is this mistake investors (and civilians) make when we think about China where we discount the nature of the political system because of what they feel is “economic success.” I made this mistake too, and the CCP is actually really good and pushing this narrative. Basically, we look at big cities, cool cars, and some of the “data” and we think, “yeah sure, they don’t have the freedoms of us Westerners, but they’re definitely getting their stuff together, and they’re probably all ok with less freedom if it means prosperity.” But this narrative is frankly one big orchestration. We see an article on China from the WSJ or NYT and we think we can trust the reporting because its a western media outlet, but this is usually straight up propaganda. Western Journalists mostly have only one place to go to find information about China and its the CCP. They have to play nice and “cooperate.” There were actually formal agreements between almost EVERY major U.S and European News outlet and the Media department of the CCP. Western news orgs were paid millions to run "China Daily” articles on their feeds (China daily is a propaganda rag). The thing is that China is actually a communist country, regardless of how fancy BYD cars are. The “opening up,” is not at all actually about “opening up.” As a matter of fact, relative to the population, there are more non-Koreans living in North Korea than Non-Chinese living in China. Almost ALL of the data completely fabricated, and has been for almost a century. And its not like there are two sets of data, right? Thats never how it works. Point being that often times, the CCP leadership also has no idea whats going on. I’m trying to work on a larger piece about this, but suffice it to say that many of the positive views one could take about China (views i’ve held myself in the past btw) are actually Chinese propaganda - designed to 1) make U.S and European investors want to pour money into the country to fund their dying system, 2) frighten the U.S population out of interference in Taiwan.
When we look at any industry in which China “dominates,” it almost always comes with a LOT of subsidies and, more importantly, complete disregard for any sort of basic environmental protection, or property rights (intellectual or otherwise). Point being, of course they control the rare earth supply chain. They poured billions of their own peoples money into this without needed to pass any kind of bill. There are no property rights, so if your town or village was sitting on top of a rare-earth reserve….guess what…you’re moving. And there’s no such thing as reclamation or tailings management. There’s also never a need for these industries to be profitable. Imagine if the bank bailouts of 2008 simply continued for two decades but extended to every other industry. Mining, manufacturing, energy, ect. Imagine if no U.S company could actually fund its operations. Sometime environmental protection can go too far in the West, but its also not intelligent to pollute key waterways. The problem is, if you’re in the CCP and your job is to evaluate environmental damage, but the party leader has mandated a massive mine or hydroplant is built….you do not tell them no! You simply “find different results for your tests.” Same with economists calculating GDP or demographers providing data on population of different cities or infant mortality rates. There are incentives to lie throughout the leadership with 0 checks at all. Even Western media outlets have a clear incentive to print whatever the CCP says. After all, if your job depended on being able to get a Visa in China, would you print stories about covid protests? or would you be more inclined to write yet another story about how China is making inroads in “clean energy?”
I recommend “China After Mao” by Frank Dikotter. He also has a wonderful interview at Hoover institution. China is a nation of a billion little lies. It uses sheer force of will to achieve its ends, but this never has been a sustainable model for a nation. Its like the boxer who swings with all his might behind every punch. It looks like hes winning right up until he can’t hold his arms up anymore.
Curious, why has your view on OTCM changed to the point it’s now on the chopping block? More to do with little price movement or just better opportunities elsewhere?
More the latter. I’m not bearish on it, but if I had to sell something…OTCM is probably the place i’d go. I actually put out a limit order at 56 for some shares.
I'm curious about your bear case for China?
Oh man, its gonna be hard to keep this answer short haha. I think there is this mistake investors (and civilians) make when we think about China where we discount the nature of the political system because of what they feel is “economic success.” I made this mistake too, and the CCP is actually really good and pushing this narrative. Basically, we look at big cities, cool cars, and some of the “data” and we think, “yeah sure, they don’t have the freedoms of us Westerners, but they’re definitely getting their stuff together, and they’re probably all ok with less freedom if it means prosperity.” But this narrative is frankly one big orchestration. We see an article on China from the WSJ or NYT and we think we can trust the reporting because its a western media outlet, but this is usually straight up propaganda. Western Journalists mostly have only one place to go to find information about China and its the CCP. They have to play nice and “cooperate.” There were actually formal agreements between almost EVERY major U.S and European News outlet and the Media department of the CCP. Western news orgs were paid millions to run "China Daily” articles on their feeds (China daily is a propaganda rag). The thing is that China is actually a communist country, regardless of how fancy BYD cars are. The “opening up,” is not at all actually about “opening up.” As a matter of fact, relative to the population, there are more non-Koreans living in North Korea than Non-Chinese living in China. Almost ALL of the data completely fabricated, and has been for almost a century. And its not like there are two sets of data, right? Thats never how it works. Point being that often times, the CCP leadership also has no idea whats going on. I’m trying to work on a larger piece about this, but suffice it to say that many of the positive views one could take about China (views i’ve held myself in the past btw) are actually Chinese propaganda - designed to 1) make U.S and European investors want to pour money into the country to fund their dying system, 2) frighten the U.S population out of interference in Taiwan.
When we look at any industry in which China “dominates,” it almost always comes with a LOT of subsidies and, more importantly, complete disregard for any sort of basic environmental protection, or property rights (intellectual or otherwise). Point being, of course they control the rare earth supply chain. They poured billions of their own peoples money into this without needed to pass any kind of bill. There are no property rights, so if your town or village was sitting on top of a rare-earth reserve….guess what…you’re moving. And there’s no such thing as reclamation or tailings management. There’s also never a need for these industries to be profitable. Imagine if the bank bailouts of 2008 simply continued for two decades but extended to every other industry. Mining, manufacturing, energy, ect. Imagine if no U.S company could actually fund its operations. Sometime environmental protection can go too far in the West, but its also not intelligent to pollute key waterways. The problem is, if you’re in the CCP and your job is to evaluate environmental damage, but the party leader has mandated a massive mine or hydroplant is built….you do not tell them no! You simply “find different results for your tests.” Same with economists calculating GDP or demographers providing data on population of different cities or infant mortality rates. There are incentives to lie throughout the leadership with 0 checks at all. Even Western media outlets have a clear incentive to print whatever the CCP says. After all, if your job depended on being able to get a Visa in China, would you print stories about covid protests? or would you be more inclined to write yet another story about how China is making inroads in “clean energy?”
I recommend “China After Mao” by Frank Dikotter. He also has a wonderful interview at Hoover institution. China is a nation of a billion little lies. It uses sheer force of will to achieve its ends, but this never has been a sustainable model for a nation. Its like the boxer who swings with all his might behind every punch. It looks like hes winning right up until he can’t hold his arms up anymore.
Believe it or not, thats the short version haha
Curious, why has your view on OTCM changed to the point it’s now on the chopping block? More to do with little price movement or just better opportunities elsewhere?
More the latter. I’m not bearish on it, but if I had to sell something…OTCM is probably the place i’d go. I actually put out a limit order at 56 for some shares.