JIM Rogers, international investor, author and adventurer, sat down with Shanghai Daily recently to discuss his views on China's economy, inflation outlook and commodity prices.

Q: You are bullish about China's future. Why is that? Do you see any setbacks in the next 10 years?

A: When I first came to China in 1984, none of the high-rises you see now in Shanghai were there. There was nothing except shacks and muddy streets. The progress China has made is staggering.

But there are going to be big setbacks. I don't know what or when. But every country that has risen has setbacks.

America was a mess and had a lot of setbacks just as it was on the verge of becoming the most successful country in the 20th century. China is going to have setbacks, too. Recession, droughts, famines; I don't know. You'll have them.

China is in a good position. You have very high savings rates, extremely good education, and overseas Chinese with lots of expertise and money to invest in China. So you have a lot of things going for China. I have little doubt that China will continue to succeed.

The only thing I worry about is water.

China has one of the worst water problems in the world. Unless you solve your water problem, there's no China story. I've been around the world a couple of times, I've seen whole cities, societies and countries disappear because of water problems.

The amount, quality and supply of water could lead to the end of China's story if the problem is not solved in time.

Q: So what do you think China is doing right or wrong in its water management planning? How to eliminate this threat?

A: Most of China's efforts in this regard are fine. But if I were China, I would raise the price of water to the end-consumer. Besides, I think it would be a sensible decision for China to buy some land, water, and water rights in Siberia to diminish the water threat. For investors, they'd better look for companies that are working on the country's water problem.



Q: Some international hedge funds are betting China's economy will soon have a hard landing. What do you think?

A: I'm sure China will have hard landings over the next 50 years. China right now does have overheating in some things. It will turn into a hard landing for many sectors of China's economy, especially real estate speculators. I am worried about China's real estate in coastal cities like Shanghai. But even if you have real estate speculators going bankrupt, there will be many other aspects that will not be affected, like water. China is spending a lot of money on water. The people in the water business are not going to have a hard landing even if everybody in Shanghai goes bankrupt.



Q: Oil and gold are continuing their market rallies. How far will they go? Is it wise to buy oil and gold companies' stocks?

A: The price of oil will go much, much higher. The world is running out of known reserves of oil. The surprise will be how high the price of oil stays and how high it goes over the next several years. But that's true with everything: silver, natural gas and rice.

I'm optimistic about both gold and silver. Gold has gone up for 10 years in a row, and silver has been very strong for the last year. It will not surprise me if they will have a correction in the next year or so. But I'll buy more gold and silver if their prices come down. I think silver will do better than gold over the next 10 years in terms of percentage rise.

Normally, you make more money in the commodities themselves rather than in commodity company stocks. There are hundreds of natural gas companies around the world, and you'll probably not get the right one. In America, we have a natural gas company going bankrupt when the price of natural gas has tripled. The thing is, you need to find the right stock, and that is difficult. The price of natural gas will never go down to zero.



Q: Inflation is becoming a global problem. What's your advice to protect investors' financial assets?

A: Buy yourself some silver. Buy yourself real assets that will go up. If there is inflation, prices of real assets always go up. So if you own these things, that's the way to protect yourself and even make some money.



Q: What do you think of the yuan and China's currency policy?

A: I think it's better for China to open its currency market as soon as possible. This is not 1981; this is 2011. China is a strong and independent country now, and they don't have to worry about the currency. It would be good for China and the 1.3 billion Chinese. Everything China imports will go down in price. You have to have a convertible currency to have a strong international economy. China is doing it but I think they could do it faster.

The reason why China is not doing it fast is because the government is worried that exporting companies may suffer. Let's say they are right about this. But there are other people that can benefit. Japan's currency has gone up over several hundred percent against the US dollar over the past decades, but Japan still has a trade surplus with the United States. Germany's currency has boomed, and the country still has balanced trade. Sure, some Japanese companies suffered, but Japan as a whole benefited and has become more and more prosperous. Some companies will have to adapt and change, but most people will be better off.



Q: What about the US dollar? Do you think it will continue to be weak?

A: I own some dollars right now. Everybody is so pessimistic, including me. But I don't think I'll own any US dollar in the next three or five years. The US dollar is a terribly flawed currency and will continue to have serious problems. If the US dollar rallies, I'll probably sell my dollars. If it doesn't, I'll probably have to sell them, take the loss and put my money into something else.



Q: So what will that mean to China, given that China is the biggest holder of US Treasury bonds?

A: I am not buying US Treasury bonds. I will tend to sell them short sometime this year because I think US bonds are going to go down a lot, especially the long-term ones. I think China is making a mistake buying a lot of US bonds. I'm an American citizen, and I wouldn't buy US government bonds.

If I were China, I will buy real assets because the US government is printing more dollars and issuing more bonds every day, but nobody is printing more zinc or cotton. If I were China or any other country, I'd stockpile these things for two reasons. One is because the price of these things will go much higher and thus serve you as a good investment. Second, even if I'm wrong about this, at least those nations would have a strategic stockpile that could be used to get them through huge emergencies, like earthquakes.



Q: Do you think the United States is going to change its quantitative easing policy after QE2 expires in June?

A: (Federal Reserve Chairman) Ben Bernanke may be forced to change the QE policy by the market. If inflation keeps going higher and higher, he will be forced to change. It's a mistake that he carried out the QE policy. He doesn't care and is just going to print money until the market forces him to stop. The market has more money; it's more powerful than any central bank.



Q: Apart from gold and silver, what else do you think is worth investing in China?

A: All commodities and the Chinese yuan. If China collapses and the stock market has a big drop, I hope I'm smart enough to buy more Chinese shares. My approach to China is that my children are going to own my Chinese shares some day. I don't do this in any other country. Only China. I hope one day my grandchildren are gonna say that the old man was really smart … wherever he is, thank you.

But I'm not buying any Chinese shares right now because the Chinese stock market has doubled in the last two or three years. I'll wait for things to drop a lot and then buy.



Q: You've made a fortune, traveled around the world twice and apparently have a happy family, with two lovely daughters. What else do you want?

A: My most important thing right now is my two little girls. What I want to do is do the best I can for them. They are my investments. They are my everything now. That's where I put my efforts and energy. That's my focus and my future. I'll judge my life by how those two little girls turn out.

I don't have any expectations for them. I just want them to figure out what makes them happy and do that. If they do what they love, they'll probably be perfectly happy.



Q: Was getting rich ever one of your dreams? What does money mean to you?

A: No, I don't really care about money. I don't have much use for money other than to buy myself freedom. I never owned more than one house at a time. I didn't have a car until recently, when my wife insisted I buy one. I wear the same clothes, some of them going back to my university years. Money to me is just a way to freedom that can allow me to do whatever I want. If I don't want to be nice to anybody, I don't have to.

Q: Will you follow Warren Buffet and Bill Gates in philanthropic pursuits?

A: I have given money to charities, especially education. I'm not quite like Warren, going around talking about what they do with their money a lot. I don't like going around talking about my money. I'll continue to give money to charities, but mostly that will be anonymous.







Born in Baltimore, Maryland, in 1942, James Beeland Rogers Jr first showed his entrepreneurial spunk at the age of five by earning pocket money selling peanuts and collecting empty bottles at American baseball games. He received a bachelor's degree from Yale University and worked on Wall Street briefly before taking a second BA degree in philosophy, politics and economics from Oxford University.

He made a name for himself as co-founder of the Quantum Fund with George Soros. In the 10 years following its inception in 1973, the fund soared 4,200 percent, compared with a 47 percent gain of the Standard & Poor's 500 index. He is now the chairman of Rogers Holdings.

In 1980, Rogers "retired" to spend time on writing, traveling and the guest lecture circuit. He has served as a visiting professor of finance at the Columbia University Graduate School of Business in New York.

From 1990 to 1992, Rogers fulfilled his lifelong dream of motorcycling around the world alone, covering more than 160,000 kilometers across six continents. He wrote about his adventure in the bestselling book "Investment Biker."

In 1998, Rogers founded the Rogers International Commodity Index.

Between 1999 and 2002, he and his wife Paige Parker drove 245,000 kilometers through 116 countries in a custom-made Mercedes. That adventure was described in the book "Adventure Capitalist."

In December 2007, Rogers moved to Singapore from New York with his family, a move he said reflected his optimism about the future of Asia. His two young daughters are being tutored in Mandarin to prepare them for what he calls "the century of China."

This year, Rogers announced he is starting a new index fund focused on agriculture, mining and energy sectors.