Published: Friday, 8 Jan 2010 | 6:08 PM ET Text Size
By: Lee Brodie
Producer
A widely followed billionaire investor is raising serious concerns about China and it appears more people are taking notice.
In Fridays New York Times the paper reiterated something billionaire hedge fund manager Jim Chanos first told the Fast Money desk, on the December 15th Halftime Report that China has the potential to be as much of a watershed event for world markets as subprime was a few years back.
A celebrated short-seller, Chanos isnt the first person to turn bearish on China, but his commentary is widely followed because he has a knack for spotting looming problems, including Enron, Tyco, and the housing crisis.
And speaking of housing, Chanos thinks Chinas troubles will stem from a real estate crisis much like our own troubles did.
(China) is a surging real estate sector buoyed by a flood of speculative capital, he says. It looks like Dubai times 1,000 or worse!
And to make matters that much more ominous, he feels Americans are investing in China without really grasping how the government works.
We just dont believe the GDP numbers. We think theyre massively inflated by under-depreciating a very shaky capital-asset base.
All these elements have the trappings of a bubble, Chanos says, and one which may soon burst. If and when that happens, Chanos expects companies will fail. As a result hes actively shorting China.
"Im looking for plays on the China investment boom, which we think will burst at some point, he said in the middle of December. Demand in China is over-inflated, that is clear."