Tuesday, July 24, 2012

Jim Rogers Strikes Back at China Bears

Responding to China bears Hugh Hendry of Eclectica and SocGen’s Albert Edwards, both of whom consider China not to be that relevant to the global economy.

Concerning Edwards, he has been predicting a hard economic landing for China for the last three years, while Hendry refuses to believe China will be the main driver of the global economy.

Rogers pointed out in an interview with Investment Week that all that's happening in China concerning the economic slowdown is proof the very public announcements by China over the last couple of years, that it is going to work on slowing down its too-hot economy ... is working.

In that regard Rogers is correct, as China leaders have indeed asserted for some time that they're going to slow down economic growth.

He said, “For three years China has announced publicly, loudly and clearly it is trying to slow its economy down. They wanted to pop their real estate bubble and do something about inflation so they have slowed things down. What is the surprise here? What is the news?”

Rogers said this about Hendry and his take on China: “Hugh has been dead wrong about China for three years now and China has not collapsed as he predicted, loudly, verbally and widely.”

As for Edwards, Rogers said that “Albert has been bearish on everything for a long time. 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 looks at the drop in Chinese shares as an opportunity to get back in the market.

Last week the Shanghai Composite index closed at 2,147, the lowest level it has been at since March of 2009.

For the next couple of years Rogers sees global economic challenges and turmoil, but believes China is positioned strongly for that because of its significant amount of foreign exchange reserves.

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