Revisiting Shan Weijian: Plain Water and Financial Storms

By Jing Liu

Everyone loves Weijian Shan. When markets cool, they love him even more.

As an investor, Shan built his reputation on two landmark deals: the buyouts of Korea First Bank and Shenzhen Development Bank. Both were state-owned banks on the brink; under his reshaping, they clawed their way back. He chronicled these episodes in two books: Money Games and Money Machine. For decades, tales of overnight fortune have been the perpetual motion engine of Chinese capital markets. Most people imagine investing as "brute force miracle" legend-making. But that's no longer sustainable. Facing a prolonged era of parallel stagnation, people have been forced to study buyouts — which only throws Shan's prominence into sharper relief.

Since taking the helm at PAG in 2010, control transactions have been his through-line. Notable cases include Tencent Music, Yingde Gases, Zhenai.com, Universal Studios Japan (USJ), and Youran Dairy.

Of these, Yingde Gases may be unfamiliar to many — after all, it's an industrial gas company distant from ordinary life. But this investment created China's industrial gas leader.

The recently completed Xindameng (formerly Wanda Commercial Management) deal is PAG's latest blockbuster. The buyout they led totaled 60 billion yuan — the largest single transaction in Chinese capital market history. According to An Yong Waves (暗涌Waves), the deal closed this September.

Some call him "China's PE King," his PAG "Asia's Blackstone." But sitting across from Shan, you'd struggle to connect him with such labels. He's slight of build, neither aloof nor familiar, habitually answering with a smile — though you catch flashes of emotion. Look closely and you'll notice: much of his phrasing hasn't changed in years.

Take his self-definition: a farmer. A man of such wealth and stature calling himself a farmer — is this humblebrag? But Shan will earnestly unbutton his collar to show the frayed neckline before he'll let it go. Further evidence of his "farmer habits": his decades-unbroken practice of drinking plain boiled water.

This also reveals something of his character: seemingly unremarkable, but in fact a ruthless operator.

Three weeks ago, Shan, long based in Hong Kong, returned to Beijing for a media forum. An Yong Waves sat down with him for a brief interview.

That day, Beijing was locked in heavy fog. The conversation ran past schedule when Shan suddenly stood — he'd promised to visit his sister that evening. At the door, he turned back to grab a pair of disposable hotel slippers. Clutching those slippers, Shan disappeared into Beijing's twilight.

Nothing Else Matters but Charging Ahead on Economic Growth

An Yong: Macro isn't really our beat, but we know you've been watching closely. The "10 trillion stimulus package" just dropped — did it meet your expectations?

Shan: I didn't really have specific expectations; I'm just observing. But one thing matters greatly: whatever the government rolls out, the stimulus figure itself is relatively small. It should function as leverage — a small force moving great weight.

What can truly generate massive impact? Only when markets and ordinary people sense, or conclude, that there's been a genuine policy pivot. Once confidence and expectations shift, the potency of capital far exceeds its nominal scale.

So the real purpose of policy is to galvanize people — like what happened on September 24 (the recent market surge).

An Yong: Did this achieve that "galvanizing" effect?

Shan: What do you think?

An Yong: Interpretations seem to vary by position? Some within the system felt it exceeded expectations.

Shan: Honestly, I can't comment on that. But watch the market reaction — markets are objective.

An Yong: Beyond equities, property recovery is another key indicator. Since March you've been writing prolifically, including that piece "The Housing Market Can Be Saved," calling for property market loosening.

Shan: First, a clarification: many assume we're an investment firm with direct property interests. Actually, we mainly do private equity in China, not real estate — no direct stake. My analysis is purely macro.

Why does property matter so much? It accounts for 59% of Chinese household wealth; its economic impact is enormous. In 2022, China's GDP grew 3%, but property dragged growth down by 4 percentage points. Last year we grew 5.2%, with property contributing negative 1.3%. If property had simply held steady these past two years, GDP growth would have been 7% and 6.5% respectively.

Simply put, China's economy is heavily dragged down by property. To truly accelerate growth, you must stabilize housing. This also affects millions of households.

An Yong: And Chinese culture particularly emphasizes "settling down."

Shan: Another factor: having experienced turbulence and poverty over past decades, Chinese people prefer tangible, touchable assets.

In the US, property is roughly 25% of household wealth. For us, it's 59%.

An Yong: But at least for now, the property market hasn't shown much recovery — still a confidence problem?

Shan: I wrote "The Housing Market Can Be Saved" in March because I sensed policy direction shifting. The May 17 property policy package confirmed those signals.

People afraid to buy homes, afraid to consume, loving to save — these are all expectation problems. Changing expectations requires not just monetary policy, but fiscal policy too.

An Yong: Ning Gaoning mentioned in an interview that your former teacher, Treasury Secretary Yellen, had argued China has overcapacity and should stimulate consumption. Ning disagreed, and asked you to relay a message to Yellen — "Economists should advocate free trade." Whose view do you favor?

Shan: I met with him around last year; we discussed many things.

Here's my view: no country strategically pursues overcapacity — it's not in their own interest. That's one issue. And overcapacity is hardly something government can control.

But our real problem? Insufficient domestic demand. So what are companies doing? Exporting. But because our exports are so competitive, they pose massive threats to competitors in other markets — so they accuse us of overcapacity, and tariffs rise.

An Yong: So it's still "where you sit determines where you stand."

Shan: So export markets are unreliable. In 2007, exports were 36% of GDP; by 2018, that fell to 18% — half the previous level. But post-2020, the ratio climbed back, nearly 20% last year. The problem: looking at international trends, the export environment is deteriorating — not just the US, but Europe, Southeast Asia, even Mexico, all have protectionist tendencies.

An Yong: Yet across Chinese business, everyone's telling a globalization story. Some say "if you don't go global, you're out."

Shan: Going out, going global — everyone's chanting this now. But I wince whenever I hear the term.

China holds roughly $3 trillion in foreign exchange reserves; substantial US Treasury holdings, over $800 billion. But our foreign currency liabilities compared to forex reserves are negligible. So our overseas asset exposure is enormous. I can't imagine a greater risk.

How to address this? First, reduce export dependence — and not just that, reduce current account surpluses. Another point: we should substantially increase foreign borrowing to rapidly develop our own economy. Achieve this, and you hit multiple birds with one stone.

An Yong: Is this also a form of "chokepoint risk"?

Shan: In 1914, the Ottoman Empire ordered two warships from Britain. WWI broke out, Churchill ordered them seized. You'd paid, they were instruments of war, and they ended up sailing to Istanbul's shores to attack you. That's a lesson from history.

An Yong: You've discussed internal and external problems — what's the fundamental solution?

Shan: I believe our potential is far from fully realized. I've cited this figure: if we maintain a 4 percentage point growth differential with the US, we overtake them by 2030 — six years from now; at 3 points, eight years; at 2 points, twelve years. Once you catch the US, they're helpless.

So for China, the paramount strategy is charging ahead at all costs. People talk about this imbalance, that structural issue — but if you power through, many problems resolve themselves. This also benefits world peace.

The Thrill of Writing a Book and Doing a Deal Are Similar

An Yong: Let's talk about your books. Why "Money Machine" for the latest?

Shan: My previous book was Money Games — "games" and "machine" carry similar weight. This book covers Shenzhen Development Bank, the story of transforming a "sick" bank into a healthy one, with many ups and downs — like shifting winds and clouds.

Look at the cover: a sailboat struggling through stormy seas, and faintly visible on it, Shenzhen Development's building and logo — the bank's building is shaped like a sailboat.

An Yong: Anything you wanted to write but didn't include?

Shan: Basically nothing.

An Yong: Your three published books — the first your early experiences; the second and third your career's most important, completed investments. Were you trying to express something through all three?

Shan: The first isn't really personal experience; more witnessing history from a participant's angle. At least in English literature, no such book existed. So I wanted to fill that gap. I'm not writing autobiography — I'm not qualified for that yet.

The latter two also filled gaps in literature. Buyouts, control acquisitions — they've become a massive force globally. In the US, private equity-controlled enterprises outnumber public companies two to one. But before my books, no complete account existed of private equity acquiring, transforming, and exiting companies. These two books describe complete acquisition stories: how to transform enterprises, create value, and exit.

Now I've filled both gaps I perceived.

An Yong: So the next one...

Shan: Ha, I know your next question. Nothing. I've no purpose left to achieve.

An Yong: Indeed many wonder — once the dust settles, will you write the Yingde, the Xindameng story?

Shan: Many stories, but I'm not interested in storytelling for its own sake. I want to fill gaps in literature.

An Yong: But listening to your tone, discovering a gap in literature and discovering a deal opportunity — the excitement feels similar.

Shan: Ha, yes.

An Yong: Previously 36Kr interviewed a lawyer who, before taking a famous case, recommended two books to his team: Bad Blood and The Smartest Guys in the Room. For you, completing a deal versus finishing a book — which brings greater satisfaction?

Shan: Finishing anything brings pleasure, but two points:

First, for me, doing deals, making investments — that's the urgent, day-and-night priority, the core business.

Second, completing an investment brings relief, but as I wrote in my second book — my former boss David Bonderman (TPG founder) told me: "Shan, the hard part has started." The truly difficult part begins the moment you complete the investment. Because until you exit, you don't know if you've made or lost money.

An Yong: The stories in these three books are distant from today. How do you recall specific people, events, and details so precisely?

Shan: You remember or you don't. It's like asking why your hair is black or white — not something I control.

Perhaps because I live with these numbers daily; what you care about, you remember. Not everything from childhood sticks, but some things are seared in. Ask anyone about 9/11 in 2001 — you won't forget. But ask: how are traffic lights arranged? Do you know?

An Yong: I don't think I've ever considered that...

Shan: I've thought about it, but I can't remember. Because for us, green means go, red means stop — we don't care about the arrangement.

M&A: Still Footsteps on the Stairs, No One Coming Down

An Yong: Two years ago we interviewed you about M&A. Two years on, you've led the Wanda Commercial Management buyout, and M&A has become even more of a talking point in Chinese capital markets. What's your read?

Shan: It's footsteps on the stairs, but no one coming down.

How so? Three or four years ago, the hottest thing in financial investment was venture capital, growth equity — seemed anyone could make money investing. But in the past three to four years, markets changed dramatically: valuations collapsed sharply; exits became harder. This put the old investment model in severe difficulty.

But control investments' greatest advantage: regardless of capital market conditions, exit is never an obstacle. Good markets mean better prices, bad markets mean worse prices. So suddenly everyone sees the virtue of buyout investing, everyone wants to pivot.

Venture and growth investing — basically you write a check. Control investing isn't like that. If you've never done it and suddenly try, you'll likely struggle.

An Yong: What's difficult? Elaborate.

Shan: Control investing faces several major hurdles: whether they'll sell to you; whether you have the track record; whether you have the capability; and how to operate post-control.

First, especially in China, whether they'll sell you control is hurdle number one. The Shenzhen Development story in my third book — preliminary talks alone took 30 months, two and a half years.

After investing such resources, the final question becomes: are you credible, do you have the capacity to close? KKR's Henry Kravis once said: any fool can acquire a company. The hard part is creating value. Our post-investment management team was forged over more than a decade, tempered through countless trials. For management of our controlled companies, our team must neither overstep nor neglect — you must strike the right balance in how you help management.

At exit, it's not simply selling. In my third book, the exit structure I describe — we employed a very complex architecture. A simple sale might have fetched $1.6 billion; we ultimately received $2.4 billion.

An Yong: Our sense too. Chinese primary markets have several "boy who cried wolf" stories — every year or two someone declares "XX spring is coming," but it never arrives. M&A is one, more a product of market sentiment.

Shan: Like when PE fever swept the nation — everyone thought they could do it. Now M&A feels similar. But it's not. The barriers to doing M&A are actually very high.

An Yong: What's PAG's overall investment approach in China?

Shan: Speaking of deals, I'll only discuss public information. Most of our investments are control-oriented.

Our most important strategic direction in China: investing in leading consumer enterprises — simple words anyone can imitate. But after saying it, how to actually invest? Many opportunities are beyond seeking.

Leading enterprises abound — Alibaba, Tencent, ByteDance — but you may not have access. Take BYD, performing excellently, but you may not only lack entry, its price is already high. So not necessarily a good investment opportunity. The hard part: when opportunity arises, can you judge swiftly and seize it? To seize requires experience, and opportunity must present itself — beyond seeking.

An Yong: Can you give an example?

Shan: Take iQiyi. In 2021, it was still cash-flow negative. But our key reason for investing: it turned cash-flow positive for two consecutive quarters in 2022.

We negotiated with iQiyi's CFO on August 14, 2022; fourteen days later we signed. Two weeks, working around the clock — $550 million in one shot.

An Yong: What's most critical to developing this instinct? If a junior asked you for three key lessons?

Shan: Yue Fei spoke of military art: "The subtlety of application resides in the mind." Anyone can read The Art of War, but true military command requires applied subtlety.

Like does graduating Whampoa Military Academy guarantee battlefield prowess? Some unschooled may surpass. This requires experience — Su Yu was brilliantly commanding, absolutely comparable to Lin Biao, sometimes perhaps superior. Yet he never attended military academy.

An Yong: Every investment decision likely results from many converging factors. Is there anything you consider most consistent?

Shan: First, it's not my individual decision — we have an investment committee where every member has veto power; we only invest with unanimous consent. Our greatest common denominator is risk control. If everyone likes it but one person objects, they must have unique insight.

If there's one consistent thing at our IC, it's the first question we ask: what is this investment target's uniqueness?

An Yong: Something I have that others don't — specifically?

Shan: Like Buffett's moat theory — that's uniqueness. Nowadays people complain everything's "involuted," hyper-competitive; if everyone's competing away profits, that's not uniqueness.

Large market share, proprietary technology, unique brand — these are uniqueness. Without such uniqueness, however profitable, we won't invest, because such profits are unsustainable.

An Yong: The Wanda Commercial Management investment you recently led has largely concluded at the transaction level. What can you share?

Shan: The company is now renamed Xindameng Commercial Management, operating roughly 500 shopping malls nationwide. It represents a leading consumer enterprise, with market leadership conferring uniqueness — fitting our investment strategy.

I Drink Boiled Water, You Drink Coffee

An Yong: Twenty years ago people spoke of the "global village," but today circles are closing. Just in investing — do you see the China-US gap widening or narrowing?

Shan: Can't simplistically say "America's like this, we're like that" — how to measure the gap between?

An Yong: Let me rephrase: if China's primary market must inevitably follow a different path from America's, what might that path look like?

Shan: No simple answer, but I believe investment philosophy and methodology shouldn't differ greatly.

An Yong: Today's investors seem forced to choose: are you a dollar fund or a China fund — is there a third path?

Shan: You can be both dollar and RMB, or both. I'll only say dollar funds focused solely on China now face considerable fundraising challenges.

An Yong: What about PAG? Does this trouble you?

Shan: We're an Asia fund, geographically diversified — active across Australia, Japan, India, and other Asian markets.

An Yong: You always say your essence is a farmer. How do you view the identity of investor, businessman?

Shan: Life is experience,烙印ing one's entire behavior. My feeling: I'm just a farmer, nothing more. I've never felt like a businessman.

An Yong: What does farmer mean?

Shan: Lifestyle habits — I drink boiled water, you drink coffee. Let me show you if this shirt is torn (he unbuttons his collar).

An Yong: Two to three decades in investing — how has it shaped you?

Shan: The best thing about investing: it's the industry where I feel I can learn most. Every investment target, every industry, every person encountered — all different. To this day, reviewing deals, I still feel excitement, never boredom.

An Yong: You've lived through turbulent times. If war ever came, how would you position yourself?

Shan: Let me tell you a story. In my teens I desperately wanted to fight — we were so poor, life hopeless, everyone sought to change fate.

Lee Kuan Yew once told me: in the 1960s, Singapore was part of Malaysia; when riots erupted, he noticed everyone first carried their bicycles home — their only asset. So he developed an idea: people with assets need stability, resist turmoil. Now Singapore has housing for all, people so prosperous — all minds are set on stability.

So — don't think about war.

An Yong: Any advice for young people today?

Shan: I dare not casually advise — that would be presumptuous.

I recall 1971: the US ping-pong team flew from Nagoya to Beijing, their first visit — the "ping-pong diplomacy." The young team leader asked Premier Zhou Enlai, who received them: what do you think of our hippie movement?

Know Zhou's reply? He said: young people will have lifestyles they pursue. Great wisdom, very diplomatic.

So young people shouldn't heed what authorities say — think independently.

An Yong: Your secret to staying fit all these years — ten kilometers daily?

Shan: That's one; I don't run that much now, mostly 8 kilometers.

An Yong: Running is so monotonous — how do you persist?

Shan: Generally I listen to audiobooks, headphones on. And think — like today, thinking what questions you'd ask.

An Yong: How does your understanding of the world today differ from five years ago?

Shan: I suppose I'm slightly smarter than five years ago?

An Yong: How do you hope people will evaluate you?

Shan: Would I care about that? Who said: walk your own path, let others talk.

An Yong: We're making this interview into a podcast — any music you enjoy? We could use it as BGM.

Shan: I like classical music.

An Yong: Specific recommendations?

Shan: Whatever you choose, the audience will like. If wrong, it's your fault.

Image source: IC Photo

Layout: Hongyu Liu