America's Money News Page - Print Page http://www.moneynews.com/PrintTemplate/?

nodeid=563486

Moneynews
Short-Seller Jim Chanos: If You Invest in
China, You're 'Participating in a Scheme'
Thursday, April 3, 2014 10:38 AM

By: Dan Weil

Renowned short-seller Jim Chanos, who has been bearish on China's

economy for several years, says its cracks are starting to show.

The government is "panicking" in light of the economy's slowdown, he tells

CNBC.
China's GDP expanded 7.7 percent in the fourth quarter, and the government
has adopted a growth target of 7.5 percent for this year.

Chinese officials announced Wednesday that they will cut taxes for small
businesses and increase railway construction. The Chinese government has
implemented these "mini-stimulus" programs for years, argues Chanos,
president of hedge fund manager Kynikos Associates.

Editor's Note: 75% of Seniors Make This $152,000 Social Security

Mistake

"One has to keep in mind, if you're a Western investor in stocks and bonds in
China, you are participating in a scheme, not a market," he notes. "This is
important. You are basically providing capital to them, and you might not see
any profits or dividends from them.

"China is the only major economy that knows its GDP for the year on Jan. 1,"
Chanos adds.

Unoccupied housing developments are rife in China, but vacant construction

projects are counted as part of its GDP, he explains. And the country's
construction bonanza has been financed largely on credit.

"Anybody who thinks that can't collapse because of too much lending has not
looked at economic history."

The stimulus measures announced Wednesday show "policymakers don't

want to take the risk of seeing growth slipping to below 7 percent," HSBC
economists Qu Hongbin and Sun Junwei write in a commentary obtained by
The Associated Press.

But Capital Economics analysts say in a commentary that the moves are
"simply reheated versions of previous announcements," AP reports.

Editor's Note: 75% of Seniors Make This $152,000 Social Security

Mistake

Related Stories:

Barclays Survey: Global Investors Most Concerned About China Growth

Marc Faber: China's In 'Colossal Credit Bubble' That's Being 'Gradually
Deflated'

2014 Moneynews. All rights reserved.

1 of 1 6/4/2014 11:34 PM