Jim Chanos: China Debt To GDP Could Soon Reach Astronomical Rate of 400%

Jim Chanos: China Debt To GDP Could Soon Reach Astronomical Rate of 400%
Jim Chanos

Legendary short seller Jim Chanos guests on Wall Street Week to discuss the art market, China and energy stocks, while guest S&P futures traders Larry Altman discusses the Flash Crash.

Jim Chanos on Wall Street Week – Text (via newsletter) and video below.

Economies and stock markets are not synonymous. However, with the Chinese economy grinding to a halt and Shanghai Stock Exchange Composite Index ripping higher, few times in history have we seen such stark contrast. So, what is the “reality” in China? The answer is complex and obscured by opaque reporting, but the trillion dollar question for investors is how a Chinese “hard landing” will impact fragile world economic recoveries and financial markets.

Starting in the 1980s, China recognized the need to put hundreds of millions of people to work and transition into a less agrarian, more manufacturing-based export economy. Free trade theory says that from 1990 from 2013, the value of the Yuan should have tripled, but instead, due to active suppression, the currency lost half of its value during that time. For the last decade, Chinese officials have allowed the Yuan to appreciate slightly to further transition to a more balanced and consumer-driven economy, but the credit-fueled experiment has largely failed.

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