By Sue Chang
Mark Mobius has advice for people betting on a Chinese collapse: Don’t underestimate the world’s second-biggest economy.
As China loses steam, prominent investors are wagering that Beijing will find itself backed into a corner as its banking sector crumbles under ballooning debt and its currency sinks. But while some signals look bad, according to Mobius, they’re not cataclysmic.
His arguments, in short: Chinese demand for raw materials may be stronger than bears realize; the country’s banks have can clean up their balance sheets; and China’s shift from a manufacturing to a service economy is baked into the country’s plan.
“If you look at the numbers, [the bears] are absolutely right,” said Mobius in a recent interview with MarketWatch. “But to say that China will allow this to get out of control is wrong. China has the resources and the will to prevent a collapse at all cost.” Read more