Summary: [This interview was done inside a train, so background noises are loud] In this episode of China Money Podcast, guest Jim Rogers shares his bearish views on the Chinese property sector, and explains why those who argue that the RMB is approaching fair value are wrong. Listen to the complete interview in the audio podcast, watch a shortened video version, or read an excerpt below. Q: We are in this high-speed train from Tianjin to Beijing going at 350km per hour. Are you impressed? A: Yes. I am. I came over today and it’s very quiet and very smooth. I couldn’t believe how wonderful it is. It’s better than an airplane. Q: This is a perfect showcase of China’s infrastructure boom during the past few decades. How much longer can this boom go on? A: I’ve driven across China a few times. I know there are a lot of space and a lot infrastructure needed to be done, so there will be more to come. Q: Last time we talked, you said the Chinese property bubble will have an ugly burst. We’ve seen housing prices drop, but by small margins. Will it get much worse? A: It’s actually been dropping a lot in some places. But, what I’m worried about is that the Chinese government is loosening interest rate and bank reserve requirement ratios too soon. If they loosen too soon, as they did once before, the bubble got much worse, and people will lose more money ultimately. Q: You predict that the U.S. economy will go into a downturn next year and 2014. How will that affect the Chinese economy? A: With the largest economy in the world having problems, everybody feels it. If you sell to Wal-Mart, you will feel the pressure. By the way, Europe is slowing down. So you have two of the largest economic blocks slowing down, China's (prospects) will be clouded too. Q: As you know, many economists are calling for the Chinese economy to warm up again, if not during the second half of this year, then early next year. You don’t think it’s the case? A: No, because I expect the U.S. and Europe to slowdown in 2013 and 2014. Sure, some parts of the Chinese economy will be fine, but most of China, especially those dealing with Europe and the U.S. will have problems. China is spending billions of dollars to clean up its air and water, so (environmental technology and) water treatment sectors will do very well. If you are in agriculture, you will not care if America is in trouble. Also, some parts of the Chinese economy will still have a hard landing, such as the property sector. So it’s a mixed bag.
