Charlie Munger on China: Why He Believes Its Economy Will Keep Growing | Berkshire 2021

[Transcript]

BECKY QUICK: This question’s for Charlie. It comes from Stephen Tedder in Atlanta. He’s been a Berkshire shareholder for 10 years and says, “You and your friend Li Lu have been very optimistic with respect to investing opportunities in China. BYD has performed spectacularly for Berkshire since its initial purchase in 2008 and it’s currently valued at $5.8 billion. The Daily Journal recently bought a large position in Alibaba after founder Jack Ma had been reprimanded by the Chinese Communist Party and Ma’s other company, Ant, was not allowed to proceed with its IPO. What are your current thoughts on China and whether the communist leaders will allow businesses with strong leadership to flourish in decades to come?”

CHARLIE MUNGER: Well, I think that the Chinese government will allow businesses to flourish. It was one of the most remarkable things that ever happened in the history of the world, when a bunch of committed communists just looked at the prosperity of places like Singapore and said the hell with this, we’re not going to stay here in poverty. We’re going to copy what works.

And they changed communism. They just accepted Adam Smith and added it to their communism and said now we have communism with Chinese characteristics, which is China with a free market with a bunch of billionaires and so forth. And they made that shift. They deserve a lot of credit. Warren and I are not quite as good at that as changing our minds, in many cases. (Laughs)

WARREN BUFFETT: Yeah.

CHARLIE MUNGER: And that was a remarkable change coming from such a place. And, of course, it’s worked like gangbusters. That is enormous growth in the average income of the average Chinese. They’ve lifted 800 million people out of poverty. Fast. There was never anything like it in the history of the world.

So, my hat is off to the Chinese. And I think they will continue to allow people to make money. They learned it works. The Chinese — I loved what the guy (Chinese leader Deng Xiaoping) said in the first place. “I don’t care whether the cat is black and white as long as it catches mice.” That’s my kind of talk.

WARREN BUFFETT: In that list of the 20 most valuable companies that just — three are Chinese. Now if you’re looking out 30 years, you know, how many do you think will be Chinese? My guess is more. But I don’t think it will top the United States. But who knows? It’s amazing what has been accomplished.

CHARLIE MUNGER: Yeah, it’s really amazing.

WARREN BUFFETT: And they found what works. I mean, there’s nothing like finding something that works in order to, sort of, reinforce ideas over time. And we’ll see what happens. But I would bet there will be more than three. But I will bet the United States has more than China has, too.

Source: https://buffett.cnbc.com/2021-berkshire-hathaway-annual-meeting/

 

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