NEW YORK (TheStreet) -- Jim Chanos, founder and president of Kynikos Associates, is shorting China saying the nation's economy is on the treadmill to hell. Legendary contrarian investor, Jim Rogers, disagrees.
Rogers moved to Asia in 2007 saying that all smart investors should do the same and that it was similar to moving to New York City in 1907. Rogers is invested in Chinese stocks, euro, dollar, renminbi, and is long commodities and short U.S. bonds.
But cries that China is a bubble have reached a fever pitch this year and the country's rising inflation seems to support these worries. China reported over the weekend that the Core Consumer Price Index for November soared 5.1% year over year compared to 4.4% in October. The country has raised the amount of money banks must hold in their reserves six times in 2010, the most recent attempt on Friday, in order to curb rising inflation.
Many investors are concerned that China, credited with jump-starting the global economic recovery, will be forced to raise key interest rates which could crimp growth as well as consumers' purchasing power.Chinese officials themselves have promised a more "prudent" growth strategy, focusing where it grows and taming inflation, but aggressive steps have not yet been taking. China seems to be avoiding raising interest rates in order to keep its local currency low. The stock market picture is mixed. On the one hand, iShares FTSE/Xinhua China Index (FXI) is up a modest 2.5% but a series of Chinese initial public offerings in the U.S. have been met with huge investor interest. Dangdang (DANG - Get Report), which has been dubbed the Chinese Amazon (AMZN - Get Report), saw average volume of 21 million shares on the second day of trading on the New York Stock Exchange. I recently sat down with Rogers to see if he was worried about slowing growth in China and how he is investing. What kind of growth do you see in China? Rogers: I have no idea. I know that it's booming. I know that every time I go to China, and I've being going to China for 26 years -- the first time I went it was 1984 -- and I assure you China is growing very rapidly and doing a lot of things right. Whether it's 8% or 12%, I mean you look at the Indians. Who can believe the Indian