{"id":502035,"date":"2010-04-01T10:51:00","date_gmt":"2010-04-01T14:51:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/7-reasons-jim-chanos-is-wrong-on-china-2010-4"},"modified":"2010-04-01T10:51:00","modified_gmt":"2010-04-01T14:51:00","slug":"the-7-reasons-jim-chanos-is-dead-wrong-on-china","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/502035","title":{"rendered":"The 7 Reasons Jim Chanos Is Dead Wrong On China"},"content":{"rendered":"

\"jimchanos2\"<\/a>(This guest post from Eric Jackson at The Street<\/a><\/em> our syndication partner)<\/p>\n

Short-seller Jim Chanos correctly saw Enron’s<\/strong> problems before they engulfed the company. He’s now making media appearances identifying China as his next short idea, specifically the Chinese commercial and residential property markets.<\/p>\n

Chanos famously referred to these markets as “Dubai times 1,000,” foreseeing a cascading effect of property defaults, non-performing bank loans, bank losses and reduced lending, a pullback in further development and jobs, and a sharp drop in demand for commodities.<\/p>\n

In short, according to Chanos, China’s property market — supporting the Chinese economy, which is the last engine powering the global economy — is about to melt down.<\/p>\n

He’s put his money<\/a> where his investment thesis is by shorting internationally traded commodity and infrastructure companies and Hong Kong property developers with exposure to China.<\/p>\n

According to a New York Times <\/em> article from January, Chanos only started studying<\/a> the China market last summer. He has apparently never visited the country and has joked on TV appearances that he will never be able to visit the country now that he’s made such bearish pronouncements.<\/p>\n

Instead, Chanos — like a lot of other Western commentators — bases his views on statistics and the opinions of other Western talking heads, many of whom also haven’t been to China lately, if ever.<\/p>\n

There’s a Chinese saying: “If you visit my village in three months, you’ll notice small changes; if you visit my village in six months, you’ll notice big changes; if you visit my village in a year, you won’t recognize my village.” Chanos and other bears haven’t even visited the village yet to kick the tires.<\/p>\n

I’ve been in China for the last 10 days and traveled around the four largest cities — Beijing, Shanghai, Shenzhen and Guangzhou — and the surrounding countryside. I’ve met with the management teams of eight Chinese companies. I’ve talked with two dozen other people living in China, including accountants, financial advisors, and property developers. I’m convinced Chanos is dead wrong is his conclusions about how the current Chinese property boom will play out.<\/p>\n

Now see the reasons ><\/strong><\/a><\/h2>\n

China is successfully transitioning to a domestically driven from an export-driven economy. <\/h2>\n

\"China<\/div>\n

The $570 billion stimulus package last year from the Chinese government is having an effect. Unlike in the U.S., where money is spent keeping municipal jobs and bailing out banks and auto companies, the Chinese stimulus is going into large infrastructure projects like high-speed rail, highways, and public transportation, as well as directly into loans. These projects make China more self-sustaining economically, supporting property pricing. Even when there have been external shocks recently, like after Lehman<\/strong> failed, property market prices<\/a> here didn’t decline.<\/p>\n