American hedge funds that invest in China do not recognize an important truth. Namely, that China is an autocratic state ultimately ruled by one man alone, Xi Jinping. As president and Chinese Communist Party chairman, Xi is all powerful. 

The interests of Americans who invest in China do not align with those of Xi. The chairman acts to ensure the dominance of the Chinese Communist Party and the power of its state. Xi’s decisions are not based on the interests of the Chinese people. Last month, influential billionaire hedge fund manager David Tepper spoke at length on CNBC about why he is aggressively investing in Chinese stocks. He said that Chinese authorities promised to do “more and more” to stimulate the economy and encourage Chinese households to increase consumption. Other American hedge funds followed Tepper’s example and jumped into Chinese equities.