Jim Chanos still bearish on China, talks malinvestment
Below is a Jim Chanos video on China now making the rounds in the financial blogosphere.
Chanos says that most financial bubbles are the result of excess credit creation and believes that is exactly what we are witnessing in China. Although Chanos sees serious overcapacity problems in China, he is not calling for a market crash. However, he does see malinvestment – and makes exactly the point about asset depreciation that I made yesterday at about 12:30 into the video. In fact, he says what may pop China’s asset bubble sooner than later is a sudden recognition that depreciating, uneconomic assets need to be maintained. He also sees China as a command economy not entirely dissimilar to the former Soviet Union.
The implications for this ‘China Syndrome’ is most about what investments to avoid – sectors with overcapacity, not just in China but globally.
The video runs just under one hour. Enjoy.