China has left “the free market” under Xi Jinping. It is no longer a good place to make investments. That’s the warning of venture capitalist Tim Draper, an early investor in Elon Musk’s Tesla and SpaceX.

Draper was also one of the first investors in the Chinese giant search engine Baidu – Google’s counterpart in China. 

Now, he’s turning his attention from China to Taiwan as his next investment destination. 

On a trip to Taiwan on Monday, November 14, Draper told Reuters:

“I used to be an investor in China.”

“Then I got an early indication that China was going to leave the free market and I decided that that was not a place I wanted to invest.”

He was on a trip to Hsinchu, the tech hub of Taiwan, to explore the country’s space program as he is considering investing in this field. 

Taiwan has a growing tech scene driven by its leading semiconductor supply chain. Also on Monday, Warren Buffet’s Berkshire Hathaway revealed that it owns $4.1 billion worth of shares in Taiwan Semiconductor Manufacturing Company – Taiwan’s top chipmaker. The announcement caused the shares to soar by almost 8%.

That happens against the fact that Buffett does not usually put much money into Asia. One transaction of Buffett was back in 2008.

Draper explained that his divestment from China was caused by Beijing’s rolling out strict control and supervision of its capital market and platform economy. This has led to China’s economic downturn. And foreign capital would look elsewhere for investment opportunities.

Referring to a potential Chinese attack on Taiwan, Draper said:

“I’m just hoping that President Xi hasn’t lost his mind completely.”

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