A billionaire investor is urging caution about investing in China, warning that he has been prevented from accessing his money because of Beijing’s strict capital controls.
According to Mark Mobius, the founder of Mobius Capital Partners, the Chinese government has taken “very significant” action to prevent him from withdrawing capital from Chinese equities since his HSBC account is situated in Shanghai.
“I can’t get an explanation of why they’re doing this. It’s just amazing. They’re putting all kinds of barriers,” Mobius told the Fox Business Network on Thursday. “They don’t say, ‘No, you can’t get your money out,’ but they say, ‘Give us all the records from 20 years of how you’ve made this money,’ and so forth. It’s crazy.”
The U.S. investor thinks the economic landscape has adopted “a completely different direction” from the previous market-oriented leader Deng Xiaoping, explaining that it is not a good sign for the country’s future if the central government becomes “more control-oriented in the economy.”
“I can’t get my money out. The government is restricting the flow of money out of the country,” he said. “So, I would be very, very careful investing in China.”
As a result of what is transpiring in the world’s second-largest economy, Mobius believes the best investment alternatives with tremendous economic opportunity are India and Brazil.
The Biden administration recently confirmed that it intends to inspect U.S. capital flows to China closely. The White House and Congress are exploring proposals to monitor and prohibit U.S. investments in China to address national security concerns.
The House Select Committee on the Chinese Communist Party, chaired by Rep. Mike Gallagher (R-Wis.), plans to scrutinize export controls and outbound investment issues as part of reviews of U.S. competition with China.
Commerce Secretary Gina Raimondo warned that these efforts must strike a balance between strategic and facilitating investments since many domestic pension funds invest clients’ money in the country.
“You certainly don’t want to do any type of thing that has an unintended consequence, that hurts folks. You don’t want to be overly broad. We want commerce, we want trade, we want global investment. Anything that’s overly broad hurts American workers and the economy,” Raimondo said in an interview with Bloomberg.
While it is a top priority for the administration, it is crucial to take it slow and “get it right” rather than denying money flows, she stated.
“And so, we’re just trying to be cautious to get it right,” Raimondo added.
By Andrew Moran