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Jim Rogers "absolutely" still bullish on China

Aaron Task
·Editor in Chief

A lot of water has gone under the proverbial bridge since 2007, when legendary investor Jim Rogers moved his family to Singapore, citing the region's huge potential. Of late, China's economy has stumbled badly even as its stock market has surged.

Rogers is "absolutely" still as bullish on China today as he was back in 2007 when he published A Bull in China, one of his many books. "Whatever happens, my children are still speaking Mandarin," he says. "They're not going to stop speaking Mandarin and learn Danish or something."

Overnight Wednesday, the Chinese government reported first-quarter GDP growth of 7% vs. the consensus estimate of 7% and 7.3% in Q4. The World Bank recently cut its 2015 forecast for Chinese GDP to 7.1%, roughly in line with the "new normal" President Xi Jinping discussed last year.

Asked about these figures and Rogers shrugs: "I pay no attention to those numbers," he says. "Most governments make up the numbers. The idea the Chinese government couldn't have any clue about what's going on in China is a little mind boggling to me. I'm sure they're certainly the right direction...but whether it's 3% or 9% I have no idea. China continues to grow, continue to boom."

Related: China's economy: It's worse than you think
Taking a longer-term perspective, Rogers reiterates what he's long said: China today is like the U.S. at the start of the 20th century.

"We rose to power and glory in the 19th century despite a horrible Civil War, 15 depressions, very few human rights, little rule of law and yet we became a pretty successful country in 20th century," Rogers says. "That's my view of China."

Rogers' long-term optimism about China was further burnished by the November 2013 Third Plenum, when the country's Communist Party leaders declared the market would play a “decisive role” in the economy going forward.

"To my astonishment and delight, they came out and said 'during periods of uncertainty, were going to let the market decide,'" he recalls. "They said the market is smarter than they are. If only people in America and Europe would figure that out; that the market is smarter than our bureaucrats."

Rogers notes "they have intimated they're going to let people go bankrupt. There's some people in the real estate business in China who should go bankrupt. I hope they let them."

Whether or not Chinese officials will really 'let the market decide' in times of market turmoil remains to be seen. In recent months, however, China has followed a familiar script of stimulus packages designed to soften the economic slowdown. The People's Bank of China (PBOC) has cut its benchmark interest rates twice this year and cut reserve requirements for lenders in February. The government has also discussed liberalizing deposit rates and announced plans to restructure its more-than 100,000 state-owned enterprises.

Partially as a result of these steps, the China stock market has surged: The Shanghai Composite was up 27% year-to-date as of Tuesday's close while the Shenzhen Stock Exchange was up a whopping 55%.
"The Chinese stock market is beginning to form a bubble" that could spread to Taiwan, Hong Kong, Singapore and other regional markets, Rogers says. Nevertheless, he's not too concerned, saying: "If you sold your American stocks in 1915, you might have looked smart for a while but you would've looked pretty foolish over the next 80 years."

Aaron Task is Editor-at-Large of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at atask@yahoo-inc.com.