I have discussed bubbles in the Chinese market in previous articles. Here is a presentation famous short seller Jim Chanos gave recently at Columbia university. The video is over an hour long and is accompanied by slide to back up his argument. Chanos declared that China’s real estate is“Dubai times 1,000 — or worse”. In a recent appearance on CNBC, Chanos claimed “Bubbles are best identified by credit excesses, not valuation excesses, and there’s no bigger credit excess than in China.”
Jim Chanos gave the the presentation as a guest lecturer in Bruce Greenwald’s class at Columbia University.
On a related note in Bloomberg article today, Jim Chanos stated “The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction.” That is a shocking statistic. China which is known for its economic prowess to most of the world for its large manufacturing base and its exporting of goods, is really almost entirely dependent on its housing market for GDP. This sounds frighteningly similar to the United States which relies on consumer spending for the majority of its GDP. This was part of the problem that got us into the mess we are in today in America.
In April, Li Lu and Bruce Greenwald took part in a discussion at the 13th Annual Columbia China Business Conference. The value investor and professor discussed multiple topics, including the value investing philosophy and the qualities Li looks for when evaluating potential investments. Q3 2021 hedge fund letters, conferences and more How Value Investing Has Read More
Chanos is predicting the bubble to burst as early as late 2010. This obviously would be a disaster for the world economy which is still crawling out of the financial crisis. Kenneth Rogoff a respected economist and author of the best seller This Time is Different: Eight Centuries of Financial Folly also agrees that bubbles are developing in the Chinese real estate market.
Below is the link to the video. It is over an hour long, but worth the watch if you have the time. Even if you are a China bull it is only fair to hear the other side.
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