Dan Wang

Maybe the sparks are still better here.

But...

I do often feel that the Chinese are just comprehensively outworking the Americans in some big ways.

Maybe that doesn't matter for technologies like AI, but for pretty much everything else, it pays to just work at much faster cycles and just learn much more.

As a former technology analyst at GovCulture Economics, this question was on our minds every day.

Our clients were endowments, pensions, hedge funds, asset allocators of all sorts, from a strictly macro perspective.

So I never said anything about buy-sell particular stocks.

But just thinking about these broad trends of China, there's several paradoxes.

The first paradox is that

Chinese companies are really capable and China's economy has grown by an average of something like 9% over the past 20 years.

And what has been happening to China's stock market, it's been essentially flat where the Shanghai and the Shenzhen exchanges have not risen very much, nothing commensurate with 9% growth.

So there's just a variety of structural factors that makes it really difficult for China's stock markets to grow writ large.

So that is one component of the valuation puzzle with a big company like ByteDance or Alibaba.

Alibaba is listed and still relatively cheap.

I think another paradox here is that, yes, a company like Alibaba or ByteDance could be throwing off so much cash, but the nature of their businesses sometimes entangles them with the Communist Party.

And the Communist Party, as I think about it, resembles something like the God of the Old Testament, which can be very generous sometimes, but then otherwise it could just randomly smite you because it's trying to pursue some sort of values-driven belief system.

ByteDance in 2018, I was living in Beijing at this time, was humiliated by the government when the government said that one of the suite of apps of ByteDance had violated core socialist values because it had a lot of these jokes out there and the Communist Party didn't really like these jokes.

And the founder of ByteDance, Zhang Yiming, wrote this totally self-flagellating letter saying, we are so sorry that we did not uphold core socialist values and I am at fault.

And it is just impossible to imagine any tech CEO in America writing something like that.

Alibaba most famously is founded by a loudmouth named Jack Ma, who shot off his mouth one too many times in the year 2020 when he launched this blistering broadside against financial regulators, saying that they were so behind the times.