Portrait of Charlie Munger
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Charlie Munger on China

Pragmatic China investor (strong)

TL;DR

Charlie Munger was a long-time, vocal proponent of deep US-China economic integration and investment, balanced by practical business reservations.

Key Points

  • He strongly advocated for the United States and China to maintain and increase free trade for mutual benefit, calling tension between the two nations wrongly created on both sides in 2023.

  • He persuaded Berkshire Hathaway to invest in the Chinese carmaker BYD in 2008, later calling the decision one of the best he had ever made.

  • He expressed admiration for the scale of poverty reduction achieved by the Chinese government's economic strategy, which he noted involved saving half of their income when poor to drive national growth.

Summary

Charlie Munger held a fundamentally positive, albeit increasingly nuanced, view on China, rooted in admiration for its rapid economic ascent and the strength of its leading companies. He frequently lauded China for taking a poor nation and raising its living standards at an unprecedented historical speed, praising its government's shrewd economic management compared to that of the United States. His investment thesis centered on the idea that the world's largest economies should remain tightly knit, advocating for significant free trade between the two nations in their mutual interest, despite mounting geopolitical tensions.

This enthusiasm was demonstrated through his major personal investment in the Chinese electric vehicle manufacturer BYD, which he once called one of his best decisions, and his active promotion of Costco's expansion into the country. However, he also acknowledged cultural defects, specifically noting that too many Chinese people believed in luck rather than odds, a national defect in his view. While Munger was a self-described China bull who saw leading Chinese companies as stronger and cheaper than many global peers, the deteriorating geopolitical climate and the rise of protectionism tempered the easy embrace of complete integration that characterized earlier periods.

Frequently Asked Questions

Charlie Munger was generally bullish on China, stating that its economy had better future prospects over the next two decades than almost any other major economy. He believed the leading Chinese companies were stronger and better than most global peers and were available at much cheaper prices.

While his core belief in the economic potential of China remained, his position was complicated by geopolitical trends. He expressed regret over rising US-China tension, suggesting both sides were guilty of being "stupid" regarding the economic relationship.

He was a major proponent and investor in BYD, the Chinese electric vehicle manufacturer, whose founder he once compared favorably to a combination of Thomas Edison and Jack Welch. Munger was also instrumental in encouraging Costco to expand its operations into mainland China.