Deepening opening-up gives Chinese market better prospects: Jim Rogers
Published: Sep 14, 2021 06:03 PM
Editor's Note: 

This is the first installment of the Global Times' new commentary series - Top View, in which global influential business leaders and prominent economists share their views on China and the geo-economic landscape.

Jim Rogers Photo: Courtesy of Jim Rogers

Jim Rogers Photo: Courtesy of Jim Rogers

In the rapidly changing financial market, perhaps only one thing is certain - differences of opinion. Every day there are people buying and some others selling no matter what the market is. Last week, a split erupted between some of the world's most prominent investors on the Chinese market, I don't know who will be proved right in the end, but I am optimistic about China's prospects.

For starters, judging from current situation within the international financial market, excessive debt is forming risks worse than the brutal COVID-19 pandemic, but China has shown more restraint, making Chinese financial assets less dangerous for investing.

Taking a lead from the US Federal Reserve, many central banks in the world have been printing huge amounts of money to stimulate their debt-laden economies, which at the same time blows up bubbles in stock, property, and bond markets. Throughout history, excessive debt always leads to problems eventually. In 2008, we had a problem in the equity markets because of too much debt, but the debt level of the world is much higher now than it was then.

In 2009, China helped save the world economy more than any other country because it had a lot of money saved for a rainy day. As the US has become the largest debtor nation in the history of the world, China, which has been taking more prudent monetary policies and managed economic recovery less badly after put the epidemic under control, for me is a less bad place to invest right now.

Second, China's more than four decades opening-up is great for both China's and the global economy. As a foreign investor participating in the Chinese market for decades, an impressive thing I witnessed is that China has been opening its stock market. As China continues expanding opening-up especially for its financial sector, it is getting increasingly easier for international investors to invest in the market. For foreign investors who are interested, now there are a variety of options from shares through Hong Kong and its stock market to Chinese bonds and Chinese currencies.

Now the US has started to close off. It's a worrying trend because opening markets and opening societies have always been good throughout history. Closing off trade has never been good so let's hope China does not follow the US and continues opening. The more open the world is to international trade, including chips trade, the better off for all economies. The US in its history has copied many things from Europe and Japan.

American companies are not doing as well as many expected in sectors like 5G. The US is using politics to help to solve an economic problem, which is not the way the world is supposed to work. Can China outperform the US in technology competition? Maybe not today, but China trains thousands of engineers every year, many more than the US does. China is going to continue to make great strides and make great progress. The US will have problems competing in some areas, just like China will have some problems competing in some areas, but open markets will be better for the world.

Third, I've seen enormous positive changes in China and I expect to see more. Recently, there are different opinions on China's regulatory moves in its tech and other sectors in the West. But I agree with some of the things China had done. For instance, about 10 years ago, many companies in China were opening up internet loans that were not being checked.  There were so many companies selling unregulated credit over the internet. I'm glad China has tightened regulation on the sector. It was a disaster waiting to happen. There still may be problems to come so I hope the controls work.

A view of the Lujiazui area, a financial zone, in Shanghai Photo: VCG

A view of the Lujiazui area, a financial zone, in Shanghai Photo: VCG

Throughout the world, all economies have to properly handle regulation on emerging industries. As new businesses mode emerges with new technologies, it's important to address loopholes. And, guarding against commercial monopolies is not unique to China. Major developed economies across the world have engaged in anti-monopoly efforts. I'm very pleased to see China engaged in targeted regulation.

Currently, the pandemic is still taking a toll on the global economy. Many companies, many industries - travel, transportation, entertainment - have been hurt badly because of the virus onslaught the world. In addition to the excessive debt that is going through roof, I see threat of a horrible bear market in the future. Now Japanese economy has serious problems with a declining population and rising debt, and the US market is facing the largest detonation in my lifetime. When the problems come, they will probably start in the West, but it will affect everybody, including China.

Still, I believe China will rise to be the most important country in the 21st century. I own Chinese shares, and I am looking to buy more Chinese shares if I find something good. I'm optimistic about agriculture in China, e.g., Beijing says, in the past 40 years, people in the cities have done well and it is now trying to help the countryside, I'm looking for opportunities in agriculture, in the countryside as well as in other sectors.

The article was compiled based on an interview with Jim Rogers, international investor and the author of A Bull in China: Investing Profitably in the World's Greatest Market.