Whatever you may think of it, the simple reality is that China is fast becoming the financial powerhouse of the world and they’re partly responsible for saving our financial ass. Here’s a 60 Minutes segment that gives quite an overview.
You can judge for yourself, but I instinctively like the guy. He seems pretty forthright and talks good sense.
"It’s our policy not to control anything," Gao said.
"So you’ll put a lot of money in a foreign company, and not even get on the board?" Stahl asked.
"Simply because we don’t want to go in and say, ‘OK, I think you should change this person or I think you should change this product line,’" Gao said. "That’s not our business."
Investing is quite a different animal from management. Here’s the standard Churchillian logic for the maintenance of peace between nations.
"What if our two governments had a serious dispute?" Stahl asked.
"Over Taiwan?" Gao asked.
"Yeah. Now could your government come in and say to you, ‘pull your money out now?’"
"It could be. But I seriously doubt that will happen.
"It would hurt you, too," Stahl said.
"Definitely," Gao said. "It would hurt me. Hurt the company. Hurt China."
And finally, on the issue of transparency, he draws a perfectly valid and logical distinction between transparency and business suicide.
"Oh, we are. Yes, we are," Gao said. "We are going to do things, just the — most of these — what Americans will believe as good sovereign-wealth funds, like the Norwegian — the Norwegian sovereign-wealth fund."
"But you know this is a huge issue," Stahl said. "Are you going to be as open as the Norwegians?"
"First, simple answer is yes. But secondly–"
"The — yeah. Secondly, as far as commercially viable," Gao said. "Because with that much money on hand, if you tell people what you’re going to do next, immediately — you know, everybody you buy becomes very expensive. Everything you want to sell becomes very cheap."
He’s going to have a tough time of it. Nothing sells like fear. China for sure has a lot of problems, and to large extent those problems are directly rooted in an utter disregard for the individual as anything other than a cog of the state or society. But as far as I can tell there’s only one long-term way to get that to change and that’s through some degree of freedom in markets and capital investment, which is the way they appear to be moving full steam ahead.
Enlightenment, individualism, capitalism, free markets…these things always were and always will be the seeds of the destruction of the state. I often wonder if Chinese communist authorities figure that they’ve already sown the seeds of their eventual downfall as an authoritarian state, but realize it’s the only way, long term, and so they’re simply managing the process carefully. Something’s gotta give, somewhere, eventually, and they may already be in too deep to go back even if they wanted.