"China has plenty of risk and obstacles that anyone who invests there should understand. There are issues that press now regarding lending growth, empty office towers, concerns over real estate speculation, the government buying goods (artificial demand), some worry about the statistics being fudged, should the yuan be allowed to appreciate it could hurt exports and so the entire economy (job loss and slower growth) and further down the road there will be a demographic problem.
Another part of Chanos' argument is that bubbles are caused by excess credit. Loan growth has been troubling and the South China Morning Post recently reported that upaid credit card debt was up 126% in 2009 (this was reported in the South Morning China Post in late November but is no longer accessible) and we have this from Time Magazine noting that the average household in China saves 25% of disposable income." Is China Really a Bubble Economy? -- Seeking Alpha
"...Chinas growth model is unsustainable because it produces what I would call a Latin American style distribution of income where the middle class is quite small. These comments echo thoughts from Xies former Morgan Stanley colleague Stephen Roach, who sees an economic safety net as critical to increasing domestic demand and forming the middle class of which Xie speaks.
Bottom line: Chinas economy is a bubble economy right now. And bubbles do not deflate; they pop." The Chinese bubble economy - Credit Writedowns
"Take a close look, however, and you may come away thinking China resembles nothing so much as Japan shortly before its stock and property markets melted down two decades ago. A speculative frenzy of borrowing and bidding up is at work. If and when prices crash, there will be hell to pay." The China Bubble - Forbes.com
"The popping of China's current housing bubble -- considered inevitable by regional experts such as Andy Xie -- could have widespread consequences. If housing turns down in China, China's growth could slow or even decline. And since the entire world is looking to China to lead global growth, then that could spell major trouble for the "global economy is recovering" story." China's Real Estate Bubble Threatens the Global Economy - DailyFinance
"Quite a few economists just don't believe the rosy picture now being painted by the official numbers.
For one thing, there is a huge gap between the country's gross domestic product as calculated by the NBS and the aggregate national GDP published individually by provincial and municipal governments. This gap exists because the NBS has always discounted data it gets from the provinces on the assumption that local officials are inflating their GDP growth numbers to improve their chances of promotion.
But in the first half of this year the gap was a lot wider than normal. All but seven of China's 31 provinces and municipalities reported GDP higher than the national average of 7.1% in the first half and the total as calculated by each province came in about 10% higher than the NBS's national figure." China's Unreliable Economic Statistics - BusinessWeek
Another part of Chanos' argument is that bubbles are caused by excess credit. Loan growth has been troubling and the South China Morning Post recently reported that upaid credit card debt was up 126% in 2009 (this was reported in the South Morning China Post in late November but is no longer accessible) and we have this from Time Magazine noting that the average household in China saves 25% of disposable income." Is China Really a Bubble Economy? -- Seeking Alpha
"...Chinas growth model is unsustainable because it produces what I would call a Latin American style distribution of income where the middle class is quite small. These comments echo thoughts from Xies former Morgan Stanley colleague Stephen Roach, who sees an economic safety net as critical to increasing domestic demand and forming the middle class of which Xie speaks.
Bottom line: Chinas economy is a bubble economy right now. And bubbles do not deflate; they pop." The Chinese bubble economy - Credit Writedowns
"Take a close look, however, and you may come away thinking China resembles nothing so much as Japan shortly before its stock and property markets melted down two decades ago. A speculative frenzy of borrowing and bidding up is at work. If and when prices crash, there will be hell to pay." The China Bubble - Forbes.com
"The popping of China's current housing bubble -- considered inevitable by regional experts such as Andy Xie -- could have widespread consequences. If housing turns down in China, China's growth could slow or even decline. And since the entire world is looking to China to lead global growth, then that could spell major trouble for the "global economy is recovering" story." China's Real Estate Bubble Threatens the Global Economy - DailyFinance
"Quite a few economists just don't believe the rosy picture now being painted by the official numbers.
For one thing, there is a huge gap between the country's gross domestic product as calculated by the NBS and the aggregate national GDP published individually by provincial and municipal governments. This gap exists because the NBS has always discounted data it gets from the provinces on the assumption that local officials are inflating their GDP growth numbers to improve their chances of promotion.
But in the first half of this year the gap was a lot wider than normal. All but seven of China's 31 provinces and municipalities reported GDP higher than the national average of 7.1% in the first half and the total as calculated by each province came in about 10% higher than the NBS's national figure." China's Unreliable Economic Statistics - BusinessWeek
