Commentary Despite high domestic economic growth and solid global recovery, the Chinese market is down on the year. At the writing of this article, the Shanghai CSI 300 index is down 5 percent versus the S&P 500’s +18 percent, and in the past five years it has risen 51 percent, a decent but modest figure compared to the S&P 500’s +103 percent. Additionally, the Chinese stock market looks optically cheap. At 12.7 times estimated price to earnings 2021, according to Bloomberg, it’s significantly cheaper than most developed economies and many emerging ones. So why do I say “optically”? Because the Chinese stock market valuation includes important discounts that any investor must consider. Political risk and government intervention is a relevant discount factor that cannot be ignored, and the recent crackdown on technology and education is proof of that. Political and government intervention risks are not exclusive to Chinese stocks but …