Stephen W. Mosher: What Warren Buffet Bailing on Chinese Economy Signifies as Tensions Rise

It was with great fanfare that Warren Buffet paid out $230 million for a 10 percent stake in Tesla rival BYD.  He had been to the future, and it was China.

Now, 14 years after his initial investment in China’s premier manufacturer of electric vehicles, Buffett is quietly pulling the plug on this and his other China plays.  It is worth asking why.  

After all, this is the same man who parlayed a small investment into a failing New England textile company called Berkshire Hathaway nearly 70 years ago into a fortune now worth close to 100 billion dollars.  If Buffett is ditching China, it means that, in his view, the risk/reward ratio has tilted decisively into the red.  

Here’s my take on what I think the aptly named Oracle of Omaha is thinking.

In a few days, the 20th Congress of the Chinese Communist Party (CCP) will open.  Party leader Xi Jinping will be supposedly “elected” to a third five-year term, but in reality he will really be locking down his control of China for life.  

Buffet, who’s worth nearly $100 billion, paid $230 million for a 10% stake in BYD almost 15 years ago. AP Buffett and Bill Gates take the stage to salute BYD in Beijing in 2010; Buffet’s initial investment is now worth some $7.5 billion. AP

The 70-year-old dictator is, like the late Chairman Mao whom he greatly admires, a radical Communist ideologue. This means his decade-long drive to concentrate all power in the hands of the state—which is to say his hands–will not only continue, but accelerate.  China’s hugely successful private sector will be bled dry, and the deadly assault on the most productive members of society—people like Alibaba-founder Jack Ma–will continue.

So will Xi’s insane Covid-Zero policy.

After the likely Wuhan lab leak, Xi announced that he was personally overseeing the pandemic response.  And the policy that he settled upon to stop the spread of the coronavirus was to lock down entire cities, even provinces.

Chinese leader Xi Jinping is set to further consolidate his hold over every element of Chinese finance and politics during the upcoming 20th Congress of the Chinese Communist Party.REUTERS

Because the lockdowns are so closely identified with Xi himself, no one in China has dared to criticize this fruitless effort to stamp out the coronavirus, even as it continues to wreak havoc in the economy.  Indeed, the immediate imposition of a rigid lockdown as soon as a handful of cases of Covid are detected has become almost a kind of loyalty test for Communist officials, a pledge of allegiance to the new Chinese emperor.    

Worse yet for China’s economic prospects, a new series of articles in the People’s Daily suggests that the deadly lockdowns, which arguably kill more people than Covid, will continue for several more years.  The official press has been at pains to stress the correctness of the Chinese response, even as every other country on the planet has abandoned it.

Under Ji’s watch, China remains the only major nation still in lockdown, a move that is stifling the economy and further eroding civil rights. STRINGER/EPA-EFE/Shutterstock

It is largely because of these two “C”s—Communism and

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