You read it here. Li Auto (NASDAQ:LI) stock is the only Chinese EV stock you should buy.

I wrote that, but I’m not alone in recommending Li. Our Vandita Jadeja says they’re “at the top of their game.” Li stock has a consensus recommendation of “buy” from brokers.

The company’s April deliveries and first quarter results should lead anyone to run to their favorite brokerage site and put down a buy order. Right?

Not necessarily. CALPERS, the huge California pension fund, is selling Li. The biggest options traders, known as whales, are split 50-50 on Li.

What can possibly be wrong with Li Auto?

LI

Li Auto

$29.50

China is What’s Wrong

China is what’s wrong with Li Auto.

Its government is increasingly belligerent, not just to American interests but to American investors.

China is telling domestic investors to stay away from U.S. equities. Its latest move, telling domestic manufacturers not to use Micron Technologies (NASDAQ:MU) chips following Micron’s moves to make chips in Korea and the United States, speaks for itself.

While most headlines about the weekend’s G-7 meeting were about Ukraine, the real object of everyone’s ire was China.

“Economic coercion” is the phrase most often used. It means China is using its economic power for political ends, further isolating Taiwan and calling in loans made as part of its “Belt and Road” initiative.

China President Xi Jinping is desperate to take over Taiwan, and he isn’t willing to wait. That’s why Warren Buffett of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) sold his Taiwan Semiconductor (NYSE:TSM) stock.

Xi is threatening a war, unhealthy for economies and other living things. He is forcibly putting down dissent, even by Chinese who have left the country.

The West is in a Cold War with Xi’s China that could become a hot one. I dumped my Alibaba stock recently, as promised. I was just in time, as its vaunted “cloud” division won’t get its price, and its recent results sent bulls scrambling.

Where is the Hope?

Is there any hope for western relations with China?

Officially, no. Unofficially, yes.

Tesla (NASDAQ:TSLA) hasn’t been kicked out of China. It remains the country’s leading luxury car brand, despite Li’s inroads. Apple (NASDAQ:AAPL) hasn’t been kicked out, although the company is moving to diversify its supply chains.

American brands from Starbucks (NASDAQ:SBUX) to YUM! China (NASDAQ:YUMC) to Coca-Cola (NYSE:KO) remain popular. Chinese still spell luxury LVMH (OTCMKTS:LVMUY)

Hong Kong’s failure to ignite after China tightened its grip is bearish. The slow pace of China’s post-COVID recovery, after Xi ended lockdowns, is troubling. There remains danger in China’s real estate market. There’s a serious brain drain going on.

China’s hand is not nearly as strong as it pretends. That means Li’s hand isn’t strong. Li could scale production and threaten Tesla’s market lead, but it’s making no moves toward export. And there is every reason to believe that, until something changes, Li cars might not be welcome here.

The Bottom Line

Li Auto is succeeding because it has the favor of China’s government. That’s a weakness and a strength.

Brands matter, and China’s is being tarnished. This limits Li’s growth opportunities to the domestic market.

Maybe it can do well there. Li Auto could kick Tesla out of the country in a few years. That’s certainly its intention. But if that’s the case, sell Tesla.

When you’re buying Li Auto stock, you’re buying China. It’s a huge domestic market and the world’s second largest economy. China is also an autocratic society with ambitions to consume East Asia.

Know that before you invest.

On the date of publication, Dana Blankenhorn held long positions in TSM and AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.