China’s long-term prospects are so strong that even a civil war, an economic collapse or political assassinations would only temporarily delay its emergence as a worldwide economic powerhouse.

With an economy that’s advancing at an average annual clip of better than 11%, $1.7 trillion in currency reserves, and an emerging middle class that will soon be the world’s largest, China represents the future to globally focused investors and businesses alike. But there’s always been a concern about just how resilient China’s economy actually would prove to be.

Rogers urged investors to dump such concerns.

In fact, according to Rogers, when it comes to the Red Dragon, only one thing could cause this powerful expansion to wash out: A major water crisis.

“China has a huge water problem,” he said. “In Northern China, they’re running out of water. They know this and they’re working on it, big time. But if they don’t solve it, or if they don’t solve it in time, then China - as you put it - has failed.”

Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first truly global investment vehicle, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.

It was after Rogers “retired” in 1980 that the public first really got to see him in action. After traveling the world on a motorcycle, Rogers penned the best seller “Investment Biker” - and gained the moniker: “Adventure Capitalist.” And he’s used the “on-the-ground” insights he gained on that trip and others that followed to make some truly historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent to other investing “experts,” and he subsequently foretold of the powerful updraft in global commodities prices that is continuing to fuel a year-long bull market in the agriculture, energy and mining sectors.

In his newest best seller, “A Bull in China,” Rogers writes about China and the commodities boom, and details dozens of ways investors can profit from these trends.

Given Rogers’ prescience - not to mention all the uncertainty that right now surrounds the U.S. economy - we thought it was well worth a sit-down with the noted guru, even if it meant traveling all the way to Singapore, where he now lives with his family, to do so.

During that hour-long interview at his home in Singapore’s exclusive Orchard Park district - with the two of us talking as he pedaled his exercise bike furiously, despite the morning heat - Rogers also said that:

• Oil prices are only going to go higher.
• That Russia will continue to “strip itself” of assets, meaning it will never emerge as an economic force.
• And that the U.S. dollar’s woes will continue.

Let’s take a look at some of the highlights of the Money Morning interview with investor and author Jim Rogers.
Keith Fitz-Gerald (Q): Can you see an instance where China fails?

Jim Rogers: Of course. Anybody - and everything - can fail. But [let’s consider] the main problem first.

I don’t worry about war or epidemics or depression or even political upheaval. Everybody has had that. America had horrible problems. We had a terrible Civil War. We had political leaders regularly assassinated 125 years ago. We had massacres in the streets. We had no human rights. We had no rule of law. You could buy and sell congressmen. You can still buy and sell congressmen in America, but they were much cheaper in those days.

America had many disasters, and yet it became the great success story of the 20th Century. As recently as 1907, the entire system went bankrupt in America: The government, Wall Street, everything. And yet, America came out of that and went on to big things.

All of those things can happen in China and would be temporary setbacks. I don’t consider any of them being the end of the China story.

The only thing that worries me permanently about the China story is water.

I’ve been around the world twice. I’ve seen many cities, societies, [and] nations that disappeared because the water disappeared. China has a huge water problem. In Northern China, they’re running out of water. They know this and they’re working on it, big time. But if they don’t solve it, or if they don’t solve it in time, then China - as you put it - has failed.

By the way, Northern India has the same problem, only worse. Many places have it now. Water is becoming a huge problem worldwide. The same is true in the Southwestern United States. You know, you may have Arizona going to war with California. Some sections of Nevada, Colorado …they’re desperate there.

So it’s not just China - but water’s the main thing that worries me about China.

As I say [that] civil war would be a terrible thing in China, but it’d be a temporary setback, as would epidemics, as would economic setbacks, [and as would a] depression. But China will come out of all that and keep going forward. Now, I don’t anticipate war in China - even civil war - but I’m suggesting that if it happened, I don’t see it as the end of the story any more than it was the end of the story in the United States.

Q: There’s a confluence of money flowing into and around China. Do you believe that the United States, with all its current problems, will get left out of this powerful and important trend?

Rogers: Absolutely.

The U.S. dollar is a terribly flawed currency. I’m trying to get all of my money out of U.S. dollars. I don’t know why anybody would put money into the U.S. dollar, and by extension into the U.S., as we stand here today. The U.S. is probably the largest debtor nation the world has ever seen!

The United States’ foreign debts are increasing at the rate of $1 trillion U.S. dollars every 15 months. U.S. foreign debt is over $13 trillion, and rising rapidly. It’s the official policy of the central bank to debase the currency. They’re trying to drive down the value of the dollar.

Q: Is the Chinese Renminbi the next great “liquidity haven” if the U.S. dollar fails? Or do you see the Euro rising to the occasion?

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