it comes to state visits the devil is in the detail. It's the nuances
of the arrangements that allow you to calibrate just how important
a relationship is. That's why the world has been watching the visit
of the Chinese President Hu Jintao with such attention. The state
dinner at the White House described as an "intimate"
event apparently signifies that Washington rates China as
pretty much the most important nation, economically, on earth. But
the visit has also prompted much speculation in the press about
how long the Chinese economic miracle can last and whether it is
about to come to a juddering halt. Jim Rogers, the legendary investor
who co-founded the Quantum Fund with George Soros, has moved his
family to Singapore and is making sure his two young daughters can
speak Mandarin. He spoke to the Business Daily's Justin Rowlatt.
The largest creditor nations in the world are in Asia now: China,
Korea, Japan, Hong Kong. This is where the assets are. You know
who the debtors are and where they are.
But listen, I mean the Chinese economy is still way behind the American
economy is and it is about the third the size of the American economy.
Yes, of course. They had a disaster for 300 years, but about 30
years ago, they woke up, they changed their minds and they said
we got to try something new. They unleashed entrepreneurship and
capitalism again, and they have been astonishing for 30 years. It
takes a while to go from a disaster to rival the Americans, but
they are on their way.
Do you really believe the Chinese boom can continue, because lots
of people are saying there are all sorts of asset price bubbles
that are going to trip the Chinese up in the coming years?
Well, the only asset bubble I see potentially in China is in urban
coastal real estate, but real estate is not nearly the entire Chinese
economy as it was in America and the U.K. Sure, they will have setbacks.
the 19th Century, America had a horrible civil war. We had 15 depressions
with a 'D.' We had very few human rights. We had massacres in the
streets regularly. We had very little rule of law. You could buy
and sell you can still buy and sell congressmen in America, but
in those days they were cheap. America had horrible problems, but
they came out of that and had a pretty good 20th Century.
So what does that imply about where people should put their money;
where are the sensible investments in Asia?
Well, the best way to invest in Asia in my view is to buy commodities,
because the Chinese have to buy cotton, they have to buy zinc, they
have to buy oil, they have to buy natural resources because they
don't have enough.
If you want
to invest in China and you own cotton, they are going to be very
nice to you Justin. They are going to pay the bills, they are going
to take you to dinner, they are going to pay you on time. If you
want to invest in stocks, you have to do a lot of homework and know
what you are doing. Another way is to invest in the currency. I
own the renminbi. I expect the renminbi to go up a great deal over
the next decade.
But commodities are already at relatively high prices, aren't they?
I mean hasn't that horse bolted already?
No, no, the only commodity I know which is making an all time high
is gold. Some commodities are up, yes. Sugar is up a lot, but Justin,
sugar is still 50% below its all time high. How can you say that's
bolted? Silver is going up, but silver is 40% below its all time
high. Yes, commodities have been going up recently, but they are
still extremely depressed on a historic basis.
So what about oil? I mean oil prices are pretty high, aren't they?
Almost $100 a barrel. Are they really going to go higher do you
Well, the surprise is going to be how high the price of oil stays
and how high it goes, because Justin we have had no major elephant
oil discoveries in over 40 years. The International Energy Agency
is going around the world pleading with people to listen. Known
reserves of oil are declining. It is not good news. Unless somebody
discovers a lot of oil very quickly, prices are going to go much
higher over the next decade.