Kyle BassThe Russia’s unprovoked war against Ukraine is not a death knell for globalization but should be a wake-up call about the risks of investing in countries that aren’t democracies, Texas hedge fund manager Kyle Bass said on CNBC on Thursday,

“You don’t have to paint it with that broad of a brush,” the founder of Hayman Capital Management told “Squawk Box” in an interview, when asked whether he thought the idea of an interconnected economy with few barriers to impede global trade was effectively over. “You have to say, each country run by maybe a despotic authoritarian should be re-reviewed and maybe not invested in.”

Bass, a fierce critic of the Chinese Communist Party, made his comments a week after BlackRock CEO Larry Fink wrote in a letter to shareholders that Russia’s invasion of Ukraine “has put an end to the globalization we have experienced over the last three decades.”

Russia has faced swift and steep economic backlash since late last month, when Russian President Vladimir Putin commenced a full-scale military assault on neighboring Ukraine. In addition to government sanctions on Russian officials, financial institutions and oligarchs, hundreds of Western businesses halted operations inside the country.

What was once the world’s 11th-largest economy is expected to contract sharply and enter into a recession in response to Western economic isolation. The Institute of International Finance estimates Russia’s economy could shrink by 15% this year.

China has not officially condemned Russia’ invasion of Ukraine, and U.S. officials have warned Beijing it would face “consequences” if it offers Russia support. European Union leaders are set to meet with top Chinese officials, including President Xi Jinping, on Friday. They’re expected to pressure China to remain neutral in the war.

“I think institutional investors’ fiduciary responsibilities need to be brought into the light because anyone invested in Russia just lost everything,” Bass said. “China is on that razors edge. … If they make the wrong decision in actually siding with Russia here overtly and submit themselves to sanctions by the U.S., then all of U.S. investment in China is suspect.”

China has become an important market for many American companies in decent decades, Bass noted, as it grew to become the second-largest economy in the world. It’s not only an important link in global supply chains, but a major consumer market, too.

However, Bass said the difference in how U.S. defense and intelligence officials view China compared to how Wall Street sees it has “never been wider.”

“In the end, what Putin just taught is, we need to look at the despotic autocrats and we need to really rethink if the negative convexity — or the negative risk — that we’re associating with these potential countries is worth the investment,” Bass said.

Bass said he’s long believed the U.S. and China would eventually grow apart economically because the foundations of the two countries “are so diametrically opposed to one another.”

“What Putin has done is just sped that up. I think over the next year or two, we’re going to learn whether taking that risk was actually worth it. I think the people that took those risks are going to realize that they weren’t worth it,” he said.