Li Ka-shing, Hong Kong’s richest man, offloads hundreds of homes — a troubling sign for China.

Hong Kong’s richest man, Li Ka-shing, has recently put hundreds of residential properties in China and Hong Kong on the market. The speed and decisiveness of his actions suggest this is more than just a portfolio adjustment. In fact, it feels like a warning we shouldn’t ignore.

Who is Li Ka-shing? Often dubbed “Asia’s Warren Buffett,” he is a legendary value investor known for his long-term perspective and uncanny ability to sense looming crises. He’s been a master at reallocating capital in advance of structural shifts. That’s why his latest move feels less like routine asset management and more like a response to an impending systemic threat—one that may not yet be visible to most observers.

So what does Li see this time? We believe his sell-off is rooted in a deeper concern about China’s economy—specifically, a combined crisis emerging in its manufacturing sector and currency system. And this goes beyond the well-known tensions with the United States.

Beyond U.S. Containment: Conflict with Non-U.S. Markets

Many attribute China’s current difficulties to its trade war with the U.S., especially the steep tariffs imposed in recent years. It’s true that the U.S. has aggressively pressured China, using tax cuts and tariffs to drive growth while systematically excluding China from new supply chains. But the real problem now extends well beyond the United States.

China’s dominance as the “factory of the world” has grown so powerful that it is increasingly seen as a threat—not just by the U.S., but by its neighbors and trade partners. Consider the case of electric vehicles (EVs): Chinese EV makers have rapidly expanded into Europe, triggering alarm across the continent. Europe, whose economy is heavily built around its auto industry, sees this as an existential challenge. As a result, the EU is now considering anti-dumping tariffs on Chinese EVs—not as a symbolic gesture, but as a structural defense.

The same is true in Korea and Japan. In key industries like steel, batteries, and chemicals, Chinese undercutting has caused growing concern. Southeast Asia, too, is increasingly leaning toward protective tariffs, driven by rising nationalism and the need to shield domestic industries.

What began as a U.S.-China trade war has now evolved into a global trade backlash against China. With the U.S. market essentially closed off, and other regions putting up barriers, China faces a daunting question: where will it sell its products? Domestic consumption? Hardly. China's internal demand has already been battered by the property market collapse. Without external buyers and with a weakening internal economy, the prospect of a manufacturing shakeout—and a broader economic crisis—grows more likely.

A Marginless Model Losing Its Last Lifeline

Despite these headwinds, Chinese manufacturers continue to flood global markets with products. The issue now is not just slim margins—it’s negative margins. China is exporting at a loss to maintain volume and global presence. But this strategy is quickly becoming unsustainable, as it fuels even stronger backlash from affected countries.

A wave of industrial restructuring is now inevitable. Many of China’s largest firms have survived only with government support. If these companies begin to collapse, the result could be a systemic shock—not just to industry, but to the financial sector. Bankruptcies would ripple through credit markets, triggering liquidity shortages and real estate sell-offs.

This is likely the risk Li Ka-shing has identified. It’s not simply about falling demand or competitiveness; it’s about the foundations of China’s economic model unraveling. And when real estate assets become illiquid—when they can no longer be sold at any price—the investor is trapped.

From Industrial Crisis to Currency Crisis

The more dangerous scenario, however, is one where a manufacturing crisis evolves into a currency and capital crisis. The United States is already cutting off capital flows into China—from venture capital to tech investment to even crypto-based remittances. Combine that with shrinking exports, and China faces a rapidly tightening foreign exchange position.

This puts the yuan under significant downward pressure. If the currency weakens too quickly, China could face surging costs for imported raw materials and growing strain on its dollar-denominated debt. That financial pressure would inevitably spill into the domestic asset market. Real estate prices could collapse further, and currency losses would amplify the damage. In such a scenario, it’s not the price of assets that matters—it’s whether they can be sold at all.

Li Ka-shing likely sees this cliff approaching. That’s why he’s acting now—selling while there are still buyers. Once the broader market begins to collapse, it will be too late. What matters isn’t the discount—it’s liquidity.

Li Ka-shing Didn’t Just Sell—He Withdrew

Li’s decision isn’t merely a property sale. It’s a strategic withdrawal of capital from China’s system. His move reflects a convergence of concerns—about market collapse, monetary instability, and the risk of being trapped in illiquid, devalued assets. He has decided that remaining in China’s supply chain and financial structure is no longer worth the risk.

The question now is: what should the rest of us do?

Do we stay invested, guided by short-term sentiment? Or do we read the structural signals and move before the cycle turns? At K3 Lab, we’ve opted for the latter. We recently shifted to cash, not because the markets are crashing today, but because the risks embedded in the system are no longer tolerable. The opportunity will come after the storm—not before it. Now is the time for strategic positioning, not passive optimism.