Join our community of smart investors

China syndrome

In the late 1960s, after 35 years abroad working for the Yankee dollar, my Uncle Walter returned to England not exactly rich, but comfortable enough. Chiefly to stave off the boredom of life in Virginia Water, he took a clerical job at the Bank of England. It was there he ran into China’s cultural revolution.

This was a time when Mao Zedong’s red guards, brandishing the Little Red Book, were running amok even in London’s West End as they pursued the destruction of the ‘four olds’. Meanwhile, in that summer of 1967 and away from the mayhem outside the front door of the Chinese embassy in Portland Place, every Friday morning, as punctilious as a butler, a man from the embassy staff would slip out of the back door and take the Underground from Regent’s Park to Bank. There, he would go to the bank’s debt-management office in the basement to meet Uncle Walter. From his brief case he would hand over bundles of cheques, all drawn on the People’s Bank of China, in order to service the loans the glorious republic had borrowed from the Old Lady. No matter that the cultural revolution would tear down the bourgeois edifice of capitalism, the debts of the people’s republic would be honoured. The red guards may be ready to slaughter the running dogs of Wall Street (probably of Threadneedle Street, too), but less excitable functionaries would pay interest in full, on time and in a hard currency.

The purpose of this anecdote – pretty well true, by the way – is to show that China’s state apparatus almost always knows where the nation’s best interests lie. The rhetoric might point one way, but the reality points in the direction of self-interest. If that applied during the chaos engendered by Mao, think how much more it should apply while comparatively sensible people are in charge.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in