When Nassim Taleb penned his now-famous "Life of a Turkey" analogy, he offered a simple yet profound lesson: the assumptions we make based on past stability can be upended in an instant. For a turkey, this means the predictable rhythm of daily feedings abruptly ends on Thanksgiving. For Western investors in China under the Chinese Communist Party (CCP), the same logic applies—with the “Thanksgiving moment” potentially being a regulatory crackdown, a geopolitical shift, or an opaque policy decision.

 

The Turkey's Lesson: Complacency is Dangerous

Western investors are often lured by China’s immense market size, rapid economic growth, and expanding middle class. Companies and financial institutions pour billions into the country, expecting returns to flow steadily as they tap into this vast economic engine.

 

Yet, much like the turkey fed daily by the farmer, these investors may mistake the appearance of stability for permanence. In reality, the CCP operates under a fundamentally different set of rules—ones that prioritize control and political stability over market predictability. While the feeding (economic growth and market opportunities) may continue for a time, investors must recognize that they are not the ones holding the knife.

 

Case Studies: Thanksgiving Moments for Investors

Several high-profile events have served as “Thanksgiving moments” for those who underestimated the risks of investing in CCP-controlled markets:

1. Jack Ma and Alibaba: Once a symbol of Chinese entrepreneurial success, Jack Ma’s abrupt disappearance from the public eye in late 2020 following a critical speech about Chinese regulators sent shockwaves through global markets. The subsequent halting of Ant Group’s IPO—a move that cost billions—was a stark reminder of the CCP's power to intervene.
2. Didi and Data Security: In 2021, Didi Chuxing, a ride-hailing giant, went public on the New York Stock Exchange, raising $4.4 billion. Within days, Chinese regulators launched investigations, citing data security concerns, and forced the app off domestic app stores. Didi’s valuation plummeted, leaving international investors reeling.
3. Tech and Education Crackdowns: Entire sectors, such as private education and technology, have been subject to sweeping regulations that wiped out billions in market value overnight. The unpredictability of these moves underscores the dangers of assuming stability in a politically controlled environment.

 

The CCP’s “Farmer Mentality”

To understand the risks, it’s crucial to recognize that the CCP is not motivated by the same principles as Western markets. While capitalist systems prioritize shareholder value and profit maximization, the CCP’s priorities are:

1. Political Stability: Any perceived threat to the party’s control—be it from influential entrepreneurs, dissenting voices, or foreign entities—is swiftly neutralized.
2. Social Harmony: Policies often aim to manage social unrest or align with long-term goals like “common prosperity,” even if they undermine short-term economic growth.
3. National Security: Issues like data sovereignty, foreign investment scrutiny, and technological independence take precedence over market access.

Western investors are, in essence, guests at the CCP’s table, subject to its rules, priorities, and whims. The turkey doesn’t decide when it’s time to feast or fast—the farmer does.

 

Strategies for Avoiding the Turkey’s Fate

If you’re considering or already investing in CCP-controlled markets, here are a few ways to mitigate the risks:

1. Evaluate the Role of China in Your Portfolio: Assess whether your exposure to Chinese markets aligns with your overall risk tolerance and investment goals. Consider the specific industries or sectors you're investing in and their susceptibility to CCP intervention.
2. Understand Political Risks: Treat CCP decisions as integral to market dynamics, not external risks. Pay attention to signals from party leadership and regulatory bodies.
3. Invest with Caution: Focus on investments that align with CCP policy priorities, such as green energy or domestic consumption, but be prepared to exit quickly.
4. Hedge Against Uncertainty: Use financial instruments like options or funds that allow you to mitigate downside risks.
5. Limit Long-Term Exposure: The longer your investment horizon in China, the more likely you are to encounter a “Thanksgiving moment.”

 

Conclusion: Beware the Illusion of Stability

Western investors in CCP China face an environment that appears stable on the surface but is fraught with unpredictable and potentially catastrophic risks. Like the turkey in Taleb’s story, you may enjoy years of profitable “feedings,” only to find the knife suddenly at your neck when a Black Swan event occurs.

 

The allure of China’s market is undeniable, but it’s crucial to approach it with a clear-eyed understanding of the risks. In the end, the turkey's plight teaches us this: no matter how abundant the feedings, the farmer’s priorities will always come first.

The U.S. military, renowned for its technological superiority and operational capability, faces an ironic and alarming vulnerability—its growing dependence on Chinese-manufactured components and financial entanglements. From microchips used in aircraft carriers to critical alloys in the F-35 fighter jets, reliance on Chinese materials and capital flows to Chinese companies pose strategic risks that could undermine U.S. national security in unforeseen ways.

 

The Extent of Dependence

Recent revelations have spotlighted the depth of U.S. reliance on Chinese supply chains. In September 2022, the Pentagon temporarily halted deliveries of F-35 fighter jets after discovering Chinese alloys in their turbomachine pumps. These pumps, critical to the jets' electrical and thermal systems, underscored vulnerabilities in supply chain transparency and compliance with U.S. defense acquisition regulations.

 

Adding to the complexity is the issue of subcontractors using Chinese suppliers without the knowledge of original equipment manufacturers (OEMs). This practice introduces hidden vulnerabilities, as military OEMs may inadvertently integrate compromised components into critical systems. Such unapproved materials or parts could become vectors for espionage, operational failures, or security breaches.

 

Financial Risks Amplify Strategic Concerns

Beyond components, U.S. financial institutions have been implicated in aiding China’s military modernization and surveillance state. A 2024 report by the House Select Committee on the Chinese Communist Party revealed that American financial institutions funneled $6.5 billion into 63 PRC companies blacklisted or red-flagged by the U.S. government. These entities are linked to advancing China’s military capabilities and supporting human rights abuses, including the surveillance state responsible for the repression of Uyghurs in Xinjiang.

 

This financial entanglement not only accelerates China's military advancements but also implicates U.S. investors in activities that contravene American values and strategic interests. The flow of capital into such companies highlights the need for stringent investment screening and a reevaluation of financial ties that inadvertently bolster an adversary.

 

Mixed Results in Reducing Dependence

Efforts to mitigate these risks remain a work in progress. The U.S. defense supply chain is deeply intertwined with global manufacturing, making it challenging to transition to domestically sourced materials or diversify supply sources. Policies like the Defense Production Act and the CHIPS and Science Act aim to bolster domestic manufacturing, but their impact will take time to materialize.

 

Similarly, oversight mechanisms for financial investments need to be strengthened to prevent American capital from supporting adversarial entities. The challenges lie not only in building alternative supply chains but also in ensuring that all aspects of national security—including economic and financial dimensions—are aligned against strategic vulnerabilities.

 

Conclusion: A Strategic Imperative

The U.S. military’s dependence on Chinese components and the financial sector’s investments in Chinese military-linked companies present multifaceted risks. In the event of a military confrontation or political decoupling between the two nations, the U.S. could face severe operational and supply chain disruptions. Beyond immediate risks, this dependence underscores the broader dangers of relying on a strategic competitor for essential materials and financial relationships.

 

To safeguard national security, the U.S. must accelerate efforts to build resilient, independent supply chains while fostering innovation in domestic manufacturing. Diversifying suppliers, stockpiling critical materials, and investing in research and development are crucial steps. Ensuring greater oversight of subcontractors and implementing stringent investment screening mechanisms can prevent adversarial advancements. Only by addressing these vulnerabilities proactively can the U.S. ensure its military remains not just formidable but also secure in the face of future challenges.

For more than two decades following the collapse of the Soviet Union, the world’s economic and political order appeared to settle into a unipolar configuration dominated by the United States and its liberal democratic allies. Globalization boomed, supply chains spread across continents, and capital flowed freely. Western companies enjoyed predictable market conditions, and investors could assume—at least in broad strokes—that the liberal, rules-based system would remain stable. However, this post-Cold War era of relative geopolitical calm has begun to unravel. Great power competition is back, and its resurgence is reshaping the global landscape, challenging long-held assumptions, and affecting how businesses operate.

 

Central to this shift is the reemergence of China and the more assertive roles played by Putin’s Russia and, to a lesser degree, the Islamic Republic in Iran. China’s rapid economic and technological ascent has transformed it into a formidable rival to Western influence. Meanwhile, Russia’s aggressive foreign policies and the West’s response—most prominently seen after Russia’s invasion of Ukraine—have renewed the specter of old-style geopolitical contestation. Iran’s ambitions and antagonistic stance toward the West add to this complex web of rivalries. These dynamics feed into a climate where national security and strategic interests increasingly dictate the terms of trade and investment.

 

The effect on globalization is profound. Where once the primary goal of corporations was cost-efficient sourcing and production to serve global markets, today’s priority is risk management and resilience. As governments scrutinize critical technologies, supply chains, and data flows, businesses can no longer assume that the cheapest or most efficient option is politically viable. The shift toward “decoupling” from China—or at least reducing dependency on it—captures this new reality. Western governments, concerned about intellectual property theft, economic coercion, and national security vulnerabilities, are now pushing companies to diversify their supply chains. While Southeast Asia, Mexico, and Eastern Europe are emerging as alternative production hubs, the process is neither straightforward nor inexpensive.

 

The challenge is not limited to China. Growing tensions with Russia, especially in energy and raw material sectors, have highlighted the costs of over-reliance on adversarial states. Meanwhile, continued concerns about Iranian policies and sanctions regimes mean that firms must navigate a labyrinth of compliance requirements before venturing into that market—or decide not to at all, most have chosen the latter.

 

For Western companies, managing these shifts is a delicate balancing act. Redesigning supply chains, ensuring compliance with evolving sanctions, and navigating stricter investment screening processes, all come at a price. Investors and shareholders must grapple with the reality that rapidly shifting geopolitical risk is now a core element of business strategy. Those companies that proactively adjust—investing in compliance, strengthening due diligence, diversifying their supplier base, and building in greater strategic resilience—stand a better chance of weathering the storm.

 

Risk management and compliance have thus become central concerns. Boards and executives must regularly reassess their exposure to political and regulatory uncertainty. The return of great power competition has injected a new layer of complexity into global business, one that demands foresight, adaptability, and a willingness to embrace a more fragmented international system.

 

The golden age of globalization is over. The blitzkrieg of deglobalization begins.