by Patrick Fearon-Hernandez, CFA  | PDF

One defining feature of the world today is the large share of the global population living under political systems that are authoritarian or moving in that direction. With 1.405 billion people, or about 18% of the global population total, China is the best example of that. Still, we suspect that many people in the West don’t appreciate how authoritarian the country is or how this structure can affect investment prospects both within China and around the world. After all, the end of the Cold War in 1991 allowed many in the West to adopt the pleasant notion that Communist dictatorship was a thing of the past. The great Chinese economic opening and reform program of the last four decades also helped obscure what was happening on the ground from Tibet to Hong Kong.

Now, under General Secretary Xi, a long program of purges in the Chinese military and defense industry has come to a head, driving home just how authoritarian the country has become again. In this report, we examine the purges and their potentially large implications for whether China launches a military seizure of Taiwan and discuss the likelihood that China can remain stable in the event that Xi dies or is incapacitated. As always, we wrap up with a discussion of the ramifications for investors.

Read the full report

The accompanying podcast for this report will be available later this week.