He believes World War III would erupt over conflict between the US and China over the US denial of oil resources to China.

Based on historic price performance, the international price of oil could remain in an upward trend for the next 20 years "easily", he said.

"At some point, rising commodity prices, especially oil, will eventually lead to World War III because the US has the oil China needs, but doesn't want to give it to them."

But Dr Doom is not all about gloom. In his latest, well-known "Gloom, Boom & Doom Report", he says the economic rise of China will be beneficial to Asia and resource-rich emerging economies like those in Africa.

Speaking at the Investing Abroad Summit in Cape Town on Thursday, Faber said that, although the rapid growth of China would continue to undermine the manufacturing sectors of other Asian countries, as well as those around the world, on balance Chinese growth would be beneficial for Asia (in terms of importing large quantities of Asian goods), as well as resource-rich emerging economies such as those in Africa, including South Africa.

Promising sectors

Corporations, financial institutions and individuals should therefore overweight their investments in Asia and in natural resources for the long-term, he believed.

It would be important to invest in countries and sectors of the economy that enjoyed comparative advantages, either in competing with China, or in sectors that would benefit from Chinese growth.

The most promising sectors, he believed were in housing, tourism, commodities, and consumer-related goods and services such as financial services, advertising, distribution, health and personal care products, entertainment and media.

"It is a no-brainer to invest in property," he told conference participants.

"This is one sector where there is no competition from China, except in Hong Kong."

Tourism was Asia's most promising growth industry, he believed, given the anticipated boom of visitors from China to the region and all over the world.

High returns

According to Faber, China's outbound traffic was growing at 25% per year, reaching 24 million in 2004. This represented less than 2% of the Chinese population, and was likely to reach more normal levels of between 5% and 10% in due course.

Commodities would also be a good long-term investment thanks to ongoing strong Chinese demand over the medium- to longer-term, although prices would fluctuate with this demand.

Farm commodities, in particular, would likely be an area to experience high returns (perhaps via investment in the futures market) given their current very low prices.

Meanwhile, he noted, Chinese demand for higher quality foods would also help drive food prices higher as incomes rose and they began to consume larger quantities of meat, fruit, vegetables, alcohol, and other products.

Currently, for example, Hong Kong Chinese consumed eight times more wine per capita than mainland Chinese, but this would change over time.

The African and Chinese economies could benefit from each other substantially, as well, he felt, as Africa had the natural resources China required, but little manufacturing capacity (excluding South Africa), while China had the manufacturing expertise to come in and develop the African continent.