Message to Shareholders Regarding Actions Related to Chinese Technology Companies, Including Didi Global, Inc.

To all shareholders,

Earlier in the month, Chinese regulators provided new guidelines related to the regulation of technology companies, including Didi Global, Inc. (“Didi’).

Matthews Asia did not participate in the IPO of Didi Global, Inc. (“Didi”) on behalf of the strategies and portfolios that we manage for clients. The situation regarding Didi specifically, and regulation of technology companies in China generally, is fluid, evolving quickly, and not completely clear at the present time. However, there appear to be two elements, in our opinion, behind recent changes in China’s regulatory environment with respect to technology companies:

• The first element is the Chinese government’s concern for data security and privacy, along with a desire to promote competition, protect consumer and small business interests, and tackle economic inequality issues. We see these concerns as positive for the long-term health of these businesses and China’s economy. These considerations are similar to the discussions taking place in Washington, London, Brussels and other capitals around the world regarding the right ways to regulate the tech industry.

• The second element is the concern by the Chinese government about the rising tensions in the political relationship with the U.S., and the direction of President Biden’s China policy. This may be leading the Chinese government to take steps to reduce the degree of interconnectivity between the two economies, including Chinese company participation in U.S. capital markets. However, it is not clear how far the Chinese government wants to move in this direction, and recent rhetoric may largely be a signal to the Biden administration rather than an indication of a major change in Chinese regulatory policy.

Our investment team continues to monitor each of these perspectives closely.

While news regarding the IPOs of Didi and Ant Financial has garnered significant media attention in recent months, there is a broad array of ongoing micro reforms in China that also merit investors’ attention. We believe that many of these reforms have been positive to longer-term development of the industries, including pricing of pharmaceutical drugs, leverage in the real estate sector, risks in the peer-to-peer lending sector, and previous reforms in regulations concerning online gaming, the solar sector, and the electric vehicle industry.

Given the liberalization of the Chinese capital markets over recent years, we are confident that despite the recent regulatory actions, which could prompt or accelerate the decision for Chinese companies listed on U.S. exchanges to seek secondary listings on exchanges in Hong Kong or mainland China, investors such as Matthews Asia will still be able to access the opportunities presented by these businesses on behalf of the strategies we manage for our clients.