Beijing has locked up another religious leader, this time a kung fu abbot, and Whitehall is tut-tutting about religious freedom. The market barely flinched. For investors, this is background noise, a reminder that China’s regulatory grip tightens while the West wrings its hands.
The abbot, master of a temple famed for martial arts, was sentenced to prison on charges that would make a Kremlin critic blush. The UK Foreign Office issued a statement calling for greater religious freedom, a noble sentiment but one that carries about as much weight as a gilt-edged promise in a rising rate environment.
Let’s look at the numbers. China’s crackdown on religious institutions has been accelerating since 2018. The country’s religious freedom index, according to the Pew Research Center, has dropped to its lowest level in a decade. Yet foreign direct investment into China hit a record $180 billion in 2023. The market has priced in state control. It’s a feature, not a bug, for global capital flows.
What does this mean for UK investors? Precious little in the short term. The FTSE 100 didn’t even hiccup. But over the long term, it’s another data point in the ‘China risk premium’ that fund managers are starting to factor in. If you’re holding Chinese equities, you’re betting that economic growth will outweigh political repression. That’s a bet that has paid off historically, but the odds are shortening.
Meanwhile, the UK’s moral posturing is economically costless, but it strains diplomatic ties that matter for trade. China is our sixth largest trading partner. Every time we lecture Beijing, we risk retaliatory tariffs or reduced market access. That’s a capital flight risk for UK businesses exposed to the Chinese market.
Let’s be clear: I’m not arguing against religious freedom. I’m arguing that markets don’t care about morals. They care about stability, predictability, and yield. China offers all three, even if the stability comes at a human cost. The UK’s sanctimony won’t change that. It’s a soundbite, not a policy.
The abbot’s jailing is a reminder that the global pushback against authoritarianism is rhetorical, not financial. Until Western governments put real economic pressure behind their words, the market will continue to price in Chinese repression as a normal cost of doing business. That’s the bottom line.
For UK investors, the real story here isn’t the kung fu abbot. It’s the growing divergence between Western values and Western capital. We preach one thing and invest in another. That cognitive dissonance is a bubble waiting to pop. When it does, expect a flight to quality: gold, US Treasuries, and maybe a prayer or two.
