China - a slam dunk for investing?

Tom Stevenson in the Telegraph seems to think investors should be piling into China:

The average multiple of earnings at which Chinese shares trade is also standing at a historically high discount to the price/earnings ratios in Hong Kong and the rest of the Asia-Pacific region excluding Japan.
That seems unfair given that Chinese companies are just as profitable as their counterparts elsewhere. Either returns in China are not sustainable or they are being mispriced.

Or.... or there's some other consideration. I searched the entire article and could not find one particular word: fraud.

I refer the reader to hedgie John Hempton whose recent investigations into China-based firms have made fascinating reading. Whether you believe his conclusions or not, the many known frauds perpetrated by Chinese firms and the corruption of local politics and business have made one wonder at the wisdom of putting large sums of money into Chinese business when one has no idea whether the firm in question is reporting legitimate profits or is making it all up.

Investing in China may or may not be a good idea. But the discount that Stevenson notes can be at least partly explained by the concern that among the barrel of shiny, tasty Chinese apples there are quite a few which will turn out to be writhing with maggots.

So who is this clown and what's his interest?

Tom Stevenson is an investment director at Fidelity Worldwide Investment. The views expressed are his own.

An investment director wants you to invest in China and doesn't want to mention fraud? Interesting. What does his Fidelity Investments page say?

Tom Stevenson joined Fidelity in 2008 as Head of Corporate and Investment Writing. [...] The ideas and conclusions in Tom Stevenson's weekly column are his own and do not necessarily reflect the views of Fidelity's portfolio managers.

"Do not necessarily reflect"... but I bet the portfolio managers have been dropping hints over lunch about what a slam dunk China would be to invest in. Like, say Anthony Bolton:

He [Anthony] returned to fund management in April 2010 with the launch of Fidelity China Special Situations PLC

What does the Fidelity China Special Situations annual report say?

Investment Performance (year to 31 March 2012):

• Net Asset Value (“NAV”) per Share total return -18.5%
• Share Price total return -26.4%
• MSCI China Index total return -12.5%

Oopsie. Well, perhaps from here the only way is up.