Ann: Half Yearly Report and Accounts, page-82

Do not think I am blind to the deficiencies of the Chinese system, or that I idealise it. I do not. The policy of organ harvesting from political prisoners is horrific. The pollution is abysmal, and the country lacks political freedom. China bullies neighbours, and often behaves like a child on the world stage. However, the psychological wounds and embarrassment at their colonisation by Western powers and Japan runs deep.

Of course Australia offers a better life. GDP per capita is higher, the air is cleaner, food is safe, and corruption is less. However, this gap is closing each year. The Chinese are Communists in name only, and have abandoned the key economic purpose of Communism by adopting capitalism. Yes, the CCP is a dictatorship, but it is a dictatorship that understands that its continued existence depends upon the support of the people. It is a dictatorship whose future existence is uncertain, and will become increasingly untenable as the growing middle class demand accountability and political freedom.

Do your own research, make your own decisions, and live with them. Yes, China does things I do not like. But I do not particular appreciate Western warmongering or support of regimes that are far worse than the Chinese such as Saudi Arabia and Pakistan. Are there not ethical concerns in owning American companies as well as Australian so far as they proceed in lockstep with the USA in their never-ending wars.

I like Chinese companies mainly because they are beaten down often at P/E's from 1 to 3, and will benefit as China continues developing economically. XPD is at a P/E of .5, because as I expected earnings would sky rocket once the store refurbishments finished. I would not be here if the P/E was 5 or 10. And many of these companies are paying very real dividends. There are advantages to the Chinese system. I wish our politicians were investing in infrastructure the way the Chinese are through high speed rail and supporting manufacturing and a vision to be the world leader in robotics and artificial intelligence. But our politicians care only about doing enough to be elected over the opposition, little more. Are our politicians out their trying to give us a better life? No, they have been complicit in allowing the outsourcing of our jobs, and are destroying our opportunities domestically by allowing uncontrolled immigration, while making little effort to create highly skill industries so that highly educated, capable citizens have adequate employment opportunities.

When a highly educated and motivated university graduate in science and engineering fails to find employment opportunities in their field of expertise, this is Australian politicians creating misery. We dig up dirt, sell it to China, and misallocate most of our societal resources speculating in real estate because our politicians have created tax incentives that reward real estate investment. This is Australian politicians creating misery that benefits mainly the rich and elite. Germany is a world leader in manufacturing and has an exports to imports imbalance exceeding even that of Chinese, despite living in a high wage country. Surely, with political leadership and vision we could do the same? Of course Germany's immigration policy is another story that is creating misery. So China favours social cohesion over individualism of the West. At least they have jobs , growing economic opportunities, and a bright future ahead of them.

The CCP is working hard to grow GDP per capita and reduce pollution. They know they risk being executed in the streets if they lose their legitimacy by failing to meet the needs of the people. I am not saying this is ideal, but I'd live in China over many other hopeless regions of the world. Our politicians can simply retire to being highly paid lobbyists if they lose an election. I believe that China will transition to democracy sometime in the coming decades, and I buy into the long term economic success story of China. Basket case areas like the Middle East, much of Africa, and Central and South America I would have far less interest in having exposure too, even if there were dirt cheap ASX listed companies from these areas. China, India, and Asia as a whole will succeed.