Chanos was the first person to figure out, some 15 years ago, that Enron was a house of cards.
.. “I’ll never forget the day in 2009 when my real estate guy was giving me a presentation and he said that China had 5.6 billion square meters of real estate under development, half residential and half commercial,” Chanos told me the other day.
“I said, ‘You must mean 5.6 billion square feet.’ ”
The man replied that he hadn’t misspoken; it really was 5.6 billion square meters, which amounted to over 60 billion square feet.
For Chanos, that is when the light bulb went on. The fast-growing Chinese economy was being sustained not just by its export prowess, but by a property bubble propelled by mountains of debt, and encouraged by the government as part of an infrastructure spending strategy designed to keep the economy humming.
Why China will never be as rich as America
But one study suggests Chinese productivity actually declined from 2008 through 2012.
China’s Long Minsky Moment
Between 2007 and 2014, total private debt in China rose from about a hundred per cent of G.D.P. to about a hundred and eighty per cent—a jump even larger than those seen in countries such as Ireland and Spain, which subsequently endured deep recessions. In 2010 alone, the amount of debt taken out by Chinese businesses and households jumped by about thirty-five per cent of G.D.P.
China’s Renminbi Devaluation May Initiate New Phase in Global Currency War
“We’ve been in a currency war for six years,” said Stephen S. Roach, a senior fellow at the Jackson Institute for Global Affairs at Yale University. “China is now moving on its currency, and other countries are using their currencies as a tool to relieve distress, and that is potentially destabilizing.”
.. “We are in a period of trade war — make no mistake,” said Michael Pettis, a professor of finance at the Guanghua School of Management at Peking University. “People say it’s a zero sum game. It’s not — it’s a negative sum game.”