Patience not just a virtue, it is the strategy

Humility and a low profile have long been considered virtues in China. But lately, it has become increasingly difficult to suppress a sense of pride in the country's progress over the past decades. At least, that was the consensus reached by journalists attending the same interview as me the other day.

While the Chinese have kept their heads down for decades, diligently catching up with mature markets, we have quietly taken the global lead in telecommunications, new energy and artificial intelligence. We are no longer exporting just low-value-added products like textiles or toys; we are exporting innovative business models. Adding to this is the world's most complete manufacturing supply chain, the largest pool of engineering talent and, of course, an unmistakable reputation as an infrastructure giant.

All these have helped China's economy gallop along for years. Yes, economic growth has slowed — a natural consequence after decades of double-digit expansion. But beneath the surface, something more fundamental is underway. The country is holding its head higher, looking further and reaching into frontier industries: space, quantum computing, brain-computer interfaces and beyond.

This shift is rooted in a solid conviction: technology will be the ultimate variable driving China's economic growth. Given the country's already massive economic scale, the marginal contribution of additional capital and labor is naturally diminishing. The future, therefore, belongs to productivity — and productivity comes from innovation.

This may leave some investors puzzled. They know the old saying: the stock market is the barometer of the economy. But if China's technological fundamentals are so strong, why hasn't the A-share market taken off?

Let's go back to the very basics. When we calculate stock prices, the premise is "going concern", meaning that the company is supposed to continue to operate for a very long time to come. The current stock price is the present value of its future cash flow.

To put it in a simple way, when we buy stocks in a company, we are buying into its future. Or, in other words, we buy part of a company because we have faith in it. Such conviction comes from the evaluation of its current performance, industry outlook, macro-environment, etc. The investor should believe that the company is doing the right things and is on the right development path.

But technology advancement is not linear; it follows a spiral or zigzag path. And while a lot of technology companies do not generate profits for years, they still require immense investment and are not able to turn in dazzling fiscal reports to their investors. This is precisely where the gap between perception and reality opens — and where patience becomes an investor's most valuable asset.

This may sound cliche. But personal perception can deviate from rational behavior, prompting reckless moves, herding and speculation. That is why it bears repeating that long-term and value-oriented investing is the golden rule.

Fortunately, the country is making every effort to make the A-share market healthier: laying the groundwork to welcome technology companies, eliminating shell companies to allocate market resources to the truly competitive ones, and introducing more patient capital such as pension funds and insurance money.

So, as long as China stays on the right path — attaching unprecedented importance to technological innovation — the stock market will eventually tell a successful story. Until then, patience is not just a virtue; it is the strategy.