Marc Faber, editor of The Gloom, Boom & Doom Report, warns investors to not let the ongoing Greek financial drama distract them from economic woes in China, which could “have a huge impact on the global economy."
"We have now hard evidence that the Chinese economy is hardly growing at the present time," Faber told CNBC's "Trading Nation."
"If China slows down, the demand for industrial commodities goes down. It affects all the resource producers: Argentina, Brazil, the Middle East, Central Asia, Africa, Australia," Faber said Monday. "That can have a huge impact on the global economy."
As the Shanghai Stock Exchange Composite Index plunged 32 percent from June 12 to July 8, stocks have rebounded somewhat, but the coast is hardly clear, Faber warns.
"It's still a fragile situation," he added, urging Americans to avoid the temptation to buy Chinese stocks despite government measures to bolster investor confidence. “I don't think that Chinese stocks are attractive and I would just stand aside."
Faber contends that growth in world's second largest economy has "slowed down to trickle," adding that anticipated growth of 6 to 7 percent is a "pipe dream," he told CNBC in a separate interview.
"We just heard from the Australian treasurer that growth this year in China will be 6.75 percent. It's a pipe dream that will never materialize. Maybe that will be published by the government but the reality is that Chinese growth has slowed down to trickle," he said.
While he urged investors to resist becoming obsessed with Greece, he said there is a lesson to be learned.
"Greece is a sideshow, because the economy is small relative to the rest of the world. But if investors are so concerned about Greece, it shows how fragile the financial markets are," Faber said.
Meanwhile, the Chinese government's steps to bolster investor confidence included the creation of a $19.4 billion fund for the country's largest brokerage firms to purchase stocks.
"From a Western market perspective, what China is trying to do cuts against everything we know that will work," Tsuyoshi Jin Saito, managing director of the Observatory Group, an economic and political advisory firm based in Washington, told New York Times columnist James Stewart
“But they don’t see this the way we do. People in the Western democracies tolerate volatility. But the failure of equity markets in China could translate into social unrest, which is a horrifying prospect for the Chinese leadership.”
China's government can make a difference in the market if it's willing to spend enough experts say. “The Chinese government’s wealth is huge. They have incredibly deep pockets,” Robert Whitelaw, a finance professor at New York University, told Stewart.
As far as other investment tips, Faber touted precious metals, including platinum, silver and gold and their related shares.
"Gold shares, they may still move somewhat lower, but if you ask me what is good value, the gold mining sector is a depressed sector."
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