Many experts have expressed concern over the country’s slowdown, although it is generally agreed it is no longer facing the hard landing that was previously predicted.However Pickard (pictured), head of emerging equities at Carmignac, predicts it is in for a rough ride over the next 10 years.
"The [possibility] of China blowing up is a risk," he said. "I think the probability of China blowing up has increased recently. What they’ve done in the last six to nine months is exactly what you wouldn’t want them to do."
The country has ramped up its spending on infrastructure, approving a £93.6bn plan in September in an effort to boost growth – a move Pickard says is not the right one over the long-term.
He commented: "China will continue to improve over the next year, but two to four years down the line the chance of it blowing up is high because of the number of credits in the system. The chance of a major crisis in the next six to seven years is extremely high."
Pickard adds that wage inflation in China is driving many western businesses, particularly those headquartered in the US, back home, since cheap labour is no longer offsetting the cost of transport.
However, despite his concerns, he says managers who are already shorting China have got their timing completely wrong, as it is likely to benefit initially from increased spending.
In the short-term, Pickard believes emerging markets as a whole are facing limited risks. He says inflation is still a threat but should not cause too many problems this year.
The largest weighting in Pickard’s five crown-rated Carmignac Emergents fund is to China, at around 20 per cent.
However, he says he prefers to get his exposure via Hong Kong, rather than directly.
"It’s a waste of time – the constraints are too big by investing directly in China," he added.
Pickard adds that many Chinese companies – such as housebuilder Vanke – are now being listed on the Hong Kong stock exchange.
"If you just sit and wait, you get access to all these opportunities in time," he said.
Pickard has headed up the Carmignac Emergents fund since its launch in February 1997. It has delivered 477.64 per cent under his guidance, beating its MSCI EM benchmark by 252.59 percentage points.
Performance of fund vs benchmark since launch
Source: FE Analytics
It has also outperformed over one, three and 10 years, but has fallen short over five, thanks largely to its poor showing in 2008.
Carmignac Emergents has a total expense ratio (TER) of 1.81 per cent. The €2bn portfolio requires a minimum investment of £1,000 and is available on the Novia platform.