Investing in China: Silk (Road) Purse or Sow’s Ear? An Interview with Scott Malpass and Jay Willoughby

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In the recent past, American investors’ views on China have rotated from unblemished enthusiasm to substantial caution. From the radical reforms of Deng Xiaoping in 1978 until quite recently, we absorbed a flood of good news from China, punctuated by the awful Tiananmen Square massacre of thirty years ago: the country had the world’s highest economic growth rate, hundreds of millions of people were lifted out of poverty, and personal freedoms expanded along with the economy. Chinese products became part of the everyday experience of American consumers, as well as an integral part of the supply chain for American businesses. China essentially became the manufacturing division of the United States and other First World countries.

More recently, however, the U.S.-China relationship has taken on a different tone. Allegations of unfair competition by China, continued surveillance of its own citizens, and reports of repression of minorities have accompanied a generally less friendly relationship. A military buildup and strong language concerning the status of Taiwan and Hong Kong have added to concerns that China was regressing –at the same time that its economic growth was observed to be slowing (not a big surprise for what is now an upper-middle-income economy).

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