GT Voice: Munger's grasp of China a legacy for Western investors
Published: Nov 30, 2023 01:00 AM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

Legendary investor Charlie Munger, Berkshire Hathaway's vice chairman and Warren Buffett's right-hand man, died on Tuesday in California, the US, according to a press release from the conglomerate. He was 99.

As the global investment community mourns Munger's death, his legendary life, wisdom, wealth and even age are being brought up again on various social media platforms with a sense of awe and admiration. 

Over the past decades, Munger and Buffett teamed up to create one of the world's largest investment conglomerates, with one of the best investment records ever. From 1965 to 2019, Berkshire Hathaway's per-share market capitalization reportedly had a compound annual growth rate of 20.3 percent. Such a performance made Munger a globally recognized investment sage. His lectures and books on economics, psychology, engineering, the wisdom of life and many other fields have influenced many investors.

Against the backdrop of China-US political tensions, people who commemorate the legendary billionaire may notice that Munger in recent years applauded China's economic system and investment opportunities by expressing his optimism about Chinese assets on various public occasions.

In an interview with the Acquired podcast released last month, Munger mentioned his high expectations for the Chinese economy. He said that the Chinese economy has better prospects over the next 20 years than almost any other big economy, and that the leading companies of China are stronger and better than practically any other leading companies anywhere - and they're much cheaper. Therefore, he said he was "willing to have some China risk in the Munger portfolio."

He also claimed that BYD's founder, Wang Chuanfu, is a "natural engineer," and that the guy at BYD is better at actually making things than Elon Musk is. "He is a natural engineer and a get-it-done type production executive, and that's a big thing. It's a big lot of talent to happen in one place. It's very useful. He solved all his problems on these electric cars, the motors, the acceleration, the braking and so on," Munger said, according to media reports.

Munger's bullish view of the Chinese economy and its companies was largely based on his in-depth understanding of the country. Munger had a large collection of books about China, and he always admired Eastern philosophy. He had great respect for Confucian values, which emphasize hard work, thrift and education. He believed that these values are the mainstream values of Chinese society and the reason for China's success. This may be a factor easily overlooked today, but it could still be an important reference to Western economists studying China's problems and analyzing its economic prospects.

There has always been a serious problem in Western judgments of the Chinese economy - that is, people and even economists do not really understand China, but they are often influenced by views from mainstream public opinion. 

Their lack of understanding means they tend to evaluate China's problems and economy from a Western viewpoint. But that's just the problem. The West and China may have much in common, but there are also many differences. The stereotype that every nation must be like a Western country is wrong and will cause huge challenges and misunderstanding in not just political issues, but also economic and trade exchanges.

Munger's insight into Chinese companies was based on his deep understanding of the dynamics of the Chinese economy and Chinese corporate culture. That's why Munger's investment in BYD was widely admired. It wasn't just one of his best decisions - it was also because his understanding of the Chinese economy and its companies enabled him to obtain huge dividends from China's industrial development.

This sort of vision and toleration for differences is what many Western politicians and economists lack, and that's worth noting in reference to Western investment circles.