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2019.12.12
Over the past four decades, the rise of China, the second largest economy in the world, has set off a frenzy of discussion on China’s mode. The reform and opening up in 1978 unleashed the power of market, boosted private sector and promoted entrepreneurship. The industrial policies, formulated by political elites, also fueled the development of industries. All these factors contributed to China’s property. At this critical juncture, relationships between government and market, public sector and private sector, morality and laws, draw much more attention from the world.
All is revealed. Long-term property depends on market and capital as well as rule-based and responsible government.
In this volume, we recommended you the following four books: Power And Prosperity: Outgrowing Communist And Capitalist Dictatorships by Mancur Olson, Justice: What's the Right Thing to Do? by Michael J. Sandel, Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are by Seth Stephens-Davidowitz and Slow Life by Wang Zengqi.
How time flies. We have recommended you 20 volumes of books. Reading and making friends are the best things in life. We hope the classics can always be your side and you could always be a bosom friend of us.
Power And Prosperity is the last book of the world-renowned economist Mancur Olson. In The Logic of Collective Action and The Rise and Decline of Nations, he analyzes the influence of advocacy groups have on national economy. This book takes it even further. He contends that collective action can solve the real problems. His exploration of achieving national prosperity will stand as a cutting-edge work on economic growth. Simple models for explaining the important notions, lucid logics and progressive inference, make his interpretation more powerful. This book can render you the rushing wisdom of this unparalleled economist.
In this book which based on his legendary Harvard course over the past three decades, Sandel offers a rare education in thinking through the complicated issues and controversies we face in public life today. It emerges as a most lucid guide for people in China who did not receive philosophy courses. It offers a great opportunity for readers to get closers to the great thinkers in the world -- Aristotle, Kant, Bentham, mill and Locke.
The fragmented questions of this book do not impede readers to take a look at his fascinating, illuminating, and witty ideas. It tells us how to seek truth. Everybody Lies offers ways to search and analyze data which enable us to know and judge this world, rather than follow the crowds. Our understanding on the reality can be twisted by ourselves and surroundings. But the big data offers revelations that can help us understand ourselves and our lives better.
The best way to recommend a writer is to present his or her famous quotes. But it does not work in Wang Zengqi’s case. Unlike other writers who always have some illuminating, splendid or insightful words, his words are quite elegant. The beauty of his mind flow through the whole prose rather than one lines.
Rewritten by: Luo Xinying, Edited by: Du Zhixin, Wei Yiyi
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026