I heard the terrible news about Jimmy Lai while I was rummaging through the portfolios of potential overseas investments. For those who do not know, the self-made Hong Kong media mogul received a sentence of twenty years for his defense of liberty and his refusal to bow to the dictator Xi. Not only do I expect this brave newsman to die in a Chinese prison, but I believe that he is being subjected to frighteningly inhumane treatment. Despite this and other atrocities, our investment companies continue to send millions of American dollars to China.
Within many of the largest US index funds that invest in emerging markets, Hong Kong is listed as a developed market while China is categorized as emerging. Since China "owns" Hong Kong, this seems to me to be about as logical as separating New York City from the United States. This financial fiction is not limited to emerging markets funds and is also the case in some of America's largest developed-world index funds. Investors, in my experience, believe that they are investing in the developed world when about a tenth of their funds might be going directly to the Chinese communists.
The situation is far worse in emerging markets portfolios.
The idea that democracy and human rights do not matter seems to be a common belief in financial circles. Canada's prime minister, Mark Carney, has announced with some fanfare that "to forge a new Canada-China partnership, the Prime Minister, Mark Carney, visited Beijing." PM Carney is an economist who served as governor of the Bank of Canada and as the head of the Bank of England. He is the ultimate finance guy. I searched his official website fruitlessly for any mention of Jimmy Lai.
I believe, and my experience supports this belief, that free and open societies are the best places to invest. I defy anyone to try enforcing a contract in China, a fundamental condition for doing business. I am always perplexed by brilliant economists who seem to miss this elemental fact about trade and investment. History is replete with bad decisions pushed by wealthy financial interests. Haiti, and Guatemala come immediately to mind. I don't believe that China will turn out well for PM Carney or for investors at many big fund companies.
In the meantime, it is difficult but not impossible to enjoy the benefits of overseas investment without supporting the enemies of America or democracy. I am as certain of that as I am desirous to be wrong about Jimmy Lai. My hope is that our government and the free world will put enough pressure on Chairman Xi that he will release Jimmy to his family. In the meantime, we favor Japan and South Korea over China as responsible places to make Asian investments.
* Pierson, D. Regalado, F. "Hong Kong Court Sentences Jimmy Lai to 20 Years." The New York Times, online, Feb. 08, 2026.https://www.nytimes.com/live/2026/02/08/world/jimmy-lai-sentenced-hong-kong. Accessed 03.02.2026.
** The Office of the Prime Minister Mark Carney. "Prime Minister Carney forges new strategic partnership with the People’s Republic of China focused on energy, agri-food, and trade." Prime Minister of Canada, online, Jan. 16, 2026. https://www.pm.gc.ca/en/news/news-releases/2026/01/16/prime-minister-carney-forges-new-strategic-partnership-peoples. Accessed on 03.02.2026.