Geopolitical tensions are rising, calling into question longstanding deep economic ties between the United States and China.
Apple etc is only one side of the coin. China imports a ton of food and energy, both of which we produce a great deal.
As a reader who experienced the turmoils of massive lockdown and sudden zero-covid exit in China, I find Mr munger hypocritical in terms of his statement about China. China’s regime now is totally a dictatorship, just like North Korea. To invest in China, you are facing discrete uncertainty, basically xi can make any company’s or industry’s value vanish overnight, and what make it worse is that no one knows xi’s next move and often dictators don’t act rationally
I share the very serious concern about the tension between China and the rest of the world, not just as an investor, but as a citizen of the U.S. and of the world. I avoid any investment in Chinese companies or in those with heavy exposure to the Chinese (mainland and H.K.) markets. The actions taken by western companies after Russian invasion of Ukraine should serve as a warning. Apple is in a delicate situation. Losing the entire Chinese market would be bad, but losing its manufacturing base in China would be devastating, at least until factories elsewhere ramp up. Apple is also pledging to make a 275 billion investment in China over 5 years, entrenching itself further in the Chinese supply chain. This makes me quite uncomfortable.
Are you worried enough about Apple’s exposure to diversify out of Berkshire?