I starred out the window of the Boeing 777 after landing in Beijing last week.  I couldn’t see the airport terminal.  It was just a few hundred yards away.  But factory smog blocked my view.

How bad is Beijing’s pollution?  That depends on whether you use the U.S. Embassy figures in Beijing or believe the Chinese government. Steven Q. Andrews is an environmental consultant based in Beijing.  He says the Chinese government reported “Beijing had 307 days in 2013 where air pollution was at moderate levels or better.” But levels reported by the U.S. embassy were over nine times higher than World Health Organization guidelines.

Chinese Smog

During my first two days in Beijing, I could chew the air particles.  I ground them between my teeth like ultra fine sand.  On the third day, a strong wind blew  a nd cleared the air. It was clean enough to go outside without a mask.  But the Chinese government deceives its people.  The air isn’t healthy.

If Big Brother were Pinocchio, its nose would dwarf its own Great Wall.  Andrew at the Great Wall

The Chinese stock market opened to foreigners in 1993.  The country’s GDP has soared.  According to the National Bureau Statistics of China, China’s GDP growth has averaged 9.08 percent between 1989 and 2014. 

But its stocks haven’t.  In 2013, Bloomberg published China Wealth Proves Elusive As China Stocks Earn 1 Percent in 20 Years. Their comment on the annualized one percent return means that a $10,000 investment in Chinese stocks would have grown to only $12,200. In U.S. stocks, $10,000 would have grown to $47,655. But the Chinese government wants to limit the number of people who know how their stock market has performed.

Last week, while in Beijing, I tried to access the Bloomberg article.  But it was blocked.  I tried multiple times on multiple days.  China bans a lot. You can’t access Google, Facebook, YouTube, Twitter or any online article that smacks of Chinese imperfection.

The Chinese government also bans books. I had flown to China to speak to international teachers at the Western Academy of Beijing.  I brought ten copies of my latest book, The Global Expatriate’s Guide To Investing. “What’s this about?” asked the customs officer in the Beijing airport.  “It’s an investment book,” I said.  “I brought them as gifts.” If they were about democracy, human rights or the Dalai Lama, I may have been strip-searched.  My books may have been burned.

But why has the Chinese stock market performed so poorly? In David Swensen’s book, Pioneering Portfolio Management, the university endowment fund manager says, “A particularly prevalent problem in many Asian countries involves family-controlled companies satisfying family desires at the expense of external minority shareholder wishes.” 

Researchers Franklin Allen, Susan Chenyu Shan, Jun “QJ” Qian and Julie Lei Zhu looked for other reasons.  They published them in The Best Performing Economy With The Worst Performing Market. They say that to gain a listing on the Chinese market, “evidence suggests outright frauds of making up revenue and profit figures in order to gain approval of CSRC [China’s Securities Regulatory Commission]”

That’s not far-fetched in a country that makes up pollution levels, bans books, and puts up an online firewall. 

So should you avoid Chinese stocks?  Perhaps not.  Every market will have its time in the sun.  And Chinese stocks are long past due.  If you want to invest in the world’s fastest growing economy, buy an index of established mid cap or large cap stocks.  The iShares MSCI China ETF (MCHI) would fit the bill.  These companies may have less to prove than their small cap counterparts.

And those with less to prove may tell the truth.

Andrew Hallam is a Digital Nomad currently living in Chapala, Mexico. He’s the author of the bestseller, Millionaire Teacher and The Global Expatriate's Guide to Investing: From Millionaire Teacher to Millionaire Expat.