Investors want to participate in the amazing growth of China and that is understandable. With all the Chinese stocks trading in the US markets, it has become increasingly easy to play along. And for most of the time since listings began, the normalcy of trading these stocks has allowed American investors to forget that they were investing in companies that exist in a Communist country. However, last weekend’s reorganization of the Chinese telecom industry by the government to make sure that there was sufficient competition and that no single company became too powerful should serve as a very important reminder. Communist governments reserve the right to adjust key aspects of their economy and communication certainly qualifies as a critical part of their country. If you bought China Mobile last week because you liked their dominance in the industry and the future earnings potential that dominance suggested, your investing thesis was changed overnight. You may not like it, but that is part of the deal when it comes to investing in Chinese stocks. The Chinese government dictates what happens there and since it is their country and their system, it is not our place to judge. Unfortunately, this risk has been largely ignored for a long time and I suspect that this telecom rearrangement will not do much to change how American investors look at Chinese stocks.