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Jim Rogers Says China Bears are Flat-Out Wrong

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Jim Rogers is out with fresh salvos in the latest investing tiff over the future of China.

Two of the foremost bears are wrong about the country's prospects, says investor Jim Rogers, known for starting the Quantum Fund with George Soros, and as one the foremost China bulls.

Rogers took aim at Albert Edwards at Societe Generale and Hugh Hendry of Eclecticaica in an interview with Investment News early this week.

“Albert has been bearish on everything for a long time,” Rogers told Investment News. “So if you are telling me he is bearish on China and bullish on everything else that would be different. But no, he is bearish on everything, including you, me and Mother Teresa.”

Rogers added that Hendry has been “dead” wrong about China for three years.

Earlier this month, Edwards warned of the dangers of China “lurching into a deep downturn, unleashing cheap goods on world markets and spawning deflation.

For his part, Hendry wrote in his 2012 outlook about the potential for bad bank debts and an increasing chance that China's efforts to steer a soft economic landing could fail.

Rogers is very aware of a slowdown in the Chinese economy. He knows that China last reported GDP growth of 7.6%, its slowest since 2009. It may slow to 7.4% this quarter.

A wave of negative economic headlines appears to be building in recent days. A member of the People's Bank of China just warned that falling producer prices and rising inflation threaten investment returns of the country's manufacturers, perhaps limiting their expansion.

Last week, Premier Wen Jiabao warned China's economy has yet to rebound, and that economic hardship may continue, increasing concerns that the government may need to take more stimulus measures.

Yet Rogers notes that China has purposely been trying to slow down the country's red-hot economy now for three years. And it is succeeding.

He readily admits that China may face challenges, but compares them to hurdles the U.S. faced during its growth heyday in the 19th century.

The latest economic data suggest that stimulus measures in China may be working to prop up industry. The HSBC Flash China manufacturing purchasing mangers index rose to 49.5 in July from 48.2 in June, a 5-month high. Readings above 50 indicates economic expansion.

That's in contrast to the fourth straight month of slower manufacturing growth in the U.S, and continued worries about the economy in Europe.

Also of note, China is stepping up efforts in information technology, new energy and high-end manufacturing. China Daily reports that the government wants those and five other key industries to generate 8 percent of the country's GDP by 2015, and 15% by 2020.

Later this week, the Chinese government is expected to unveil a national development plan detailing major projects through 2015, including growth initiatives and efforts to save energy.

That may provide more talking points in a war of words – or at least a skirmish – among Rogers, Edwards and Hendry.

Posted-In: News Bonds Hedge Funds Futures Commodities Global Economics Hot Best of Benzinga

 

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