Longtime China bull Jim Rogers had some harsh words for China bear Hugh Hendry over the weekend.
“Hugh has been dead wrong about China for three years now and China has not collapsed as he predicted, loudly, verbally and widely,” said Rogers.
Hugh Hendry has written scathing reports over the Chinese growth plan which he called unprecedented in 400 years of economic history.
However, upon closer examination, it is unclear whether Hendry has been dead wrong.
First of all, Chinese property prices are down 30% in some areas. Secondly, the Shanghai market is near the 2009 lows. Thirdly, commodity producers such as BHP and Rio Tinto are at multi year lows. Shorting all three asset classes would have yielded profitable speculations over the last three years.
Furthermore the economic slide in China may only be in the early innings. Perhaps, GDP in China will continue to contract as Europe and the U.S. enter a recession. The export model may stagnate in the next two years as the indebted West is forced to de-leverage.
Jim Rogers sees the slowing growth in China but he does not see an economic collapse on the horizon.
“We have many problems facing the world and are set for some very serious problems in 2013 and 2014,” he said. China reported GDP growth of 7.6% in 2012, its slowest growth rate since 2009, and last week Premier Wen Jiabao issued a warning on the country’s stability and economic prospects.
But Rogers said these developments are just evidence the Chinese government is sticking to its long-term plan for the economy. “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?”