Chinese Economists: Buy German & Jim Rogers On Why China Is Worried

Chinese researcher with the Institute of European Studies at the China Institute of Contemporary International Relations, Liu Mingli, is troubled at the prospects of Greece being forced to leave the european union. Liu said, “it will be the first domino to fall and panic will soon spread to other countries such as Portugal, Ireland and Spain”.

Greek Contagion Fears!

On the heals of the meeting between France’s Leader Hollande and Germany’s leader Merkel, Liu seemed concerned by the same confrontational tone that has dared Greece to renegotiate the terms of the bailout. China is holding $3.3 trillion in foreign reserve assets. The export powerhouse is well aware that an un-orderly exit by Greece would damage their euro holdings that account for 10 to 20 of their total reserve currency portfolio.

How Would China Protect Their Risk in Europe?

Wei Liang is in favor of switching euros for German bonds. He is a, yes this is another long title, a researcher from the Institute of World Economic Studies at the China Institute of Contemporary International Relations. Lui thinks there maybe a silver lining, “Chinese companies will have the upper hand because Europe now faces a fund shortage.”

Investor Jim Rogers: China Worries Inflation, Currencies, Housing Bubble, and Unrest

Jim Rogers has a long history investing in commodities and has experience in foreign markets. He gives an interesting view on China, Europe, and investing for the future.

If he is right about why China is truly worried then it makes sense for China to scramble to mitigate the effects in the eurozone. China is afraid the contagion will lead to more protests and more intense protests from Chinese citizens IF their economy worsens.

Not to patronize Jim and other austerity/gold bugs but he and others have chirped about inflation in the U.S. since the economic downturn in 2008. Inflation has been well under 3 % or its been deflation for some time. Let’s hope he’s not right about turmoil in China though. He does seem to have a “boots on the ground” approach there.

Metals And Emerging Markets Took A Beating

Emerging Market Stocks Drop on Concern Over China Greece Bloomberg

To reiterate this point, emerging markets took a beating today! The MSCI Emerging Markets Index fell is 14 % below its March 2nd highs and MSCI BRIC Index (MXBRIC) fell 2.4 % today. Ironically, gold, considered by many conservative investors as a safe haven during chaos, declined taking down producers of the metal.

Jim Rogers may have a point! The eurozone may go down and drag weaker economies through the mud.

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