Self-proclaimed "adventure capitalist" Jim Rogers made millions on Wall Street, cofounding the Quantum Fund with legendary investor George Soros before "retiring" in 1980, at age 37, to travel the world in high and low style looking for the next big moneymaking idea. Since then, Rogers has notched a couple Guinness Book of World Records mentions for his global road trips chronicled in Investment Biker: Around the World With Jim Rogers and Adventure Capitalist: The Ultimate Road Trip. And he has been lauded for predicting the current rally in commodities. Now, he's touting the big boom in China. Ahead of the release of his new book, A Bull in China: Investing Profitably in the World's Greatest Market, Rogers talked with U.S. News about Asia's rise and America's problems. Excerpts:
What is China's economic growth comparable to?
It is their industrial revolution. I don't think we've ever seen a huge economy transformed so quickly as we've seen happen in China over the past 30 years. We're talking about a billion 300 million people who've gone essentially from subsistence living to the most rapidly growing economy in the world.
How should you invest in China today?
The best thing to buy now is the currency, the renminbi. I don't see how one could fail there. It's got to go higher over the years. Buying commodities is another way to invest in China because China absolutely has to buy them.
But Chinese stocks have been soaring.
The Chinese stock market at the moment is an incipient bubble. The Chinese government is trying to cool it off. I hope they do. If it turns into a bubble, then I'll have to sell because all bubbles end badly. There are a couple peculiarities in the Chinese market. If shares of company A in Shanghai trade at 100, the same shares in the same company in Hong Kong might sell at 60 because in China [retail investors] can't put their money anywhere else.
Which Chinese industries are poised for the best long-term growth?
Tourism is one of them. The Chinese have not been able to travel for the last 300 years. Now they can. Some of us remember when suddenly the Japanese appeared on Madison Avenue. There are around 125 million Japanese. There are more than 10 times as many Chinese. You can imagine as they flood the world with tourism it's going to be growing for years to come. Chinese agriculture is another thing I think is going to boom because it's such a wreck. The Chinese government is throwing money and incentives at agriculture.
Can China stand on its own two feet if the United States goes into a recession?
The U.S. is the largest economy in the world, and in my view it's in a recession now, and that's going to have an effect in many places. However, China has a lot of internal growth now which is independent of the U.S.—things like water, tourism, agriculture, or power generation. If the U.S. totally collapsed, people in agriculture in China are never going to know it because there's such a gigantic future there.
What's the entrepreneurial environment like in China today?
In China, they save and invest over 35 percent of their income. In America, we save and invest less than 2 percent of our income. When people come to work for you in China, they don't ask, "How many days holiday do I get?" they say, "How many days can I come to work?" They want to live like we do, and they're willing to work hard, invest, and do whatever they've got to do. The drive in China is the drive we in America had once.
Everything we've discussed sounds like western-style capitalism. But China's still a Communist country.
The Chinese call themselves Communists. No question about that. But they're among the best capitalists in the world. I know people who believe they may be the best capitalists in the world right now. Everybody in the Communist Party is trying to get rich, and the party allows capitalists in.
What's your take on the U.S.-China trade climate? Are we turning more protectionist?
We are becoming more protectionist. It's frightening. Other countries are starting to close off, too. Nobody in history has ever won a trade war. It's impossible. If it happens, we'll all be in serious trouble.
Is the Chinese economy ever going to eclipse the American economy?
Yes, but not anytime soon. If things continue as they are now, the Chinese economy in 15 or 20 years will be larger than the U.S. economy but not on a per capita basis.
What's the biggest domestic risk to China's expansion?
It's their water problem. In all of northern China, there are shortages of water developing. China is desperately trying to address the shortage problem. So somebody's going to make a huge fortune from it. But if they don't solve it, it's the end of the story.