Jim Chanos is a famous market short-seller who built a reputation on predicting the collapse of Enron early and shorting the stock. For the past decade, Chanos has been a skeptic of China’s economy and in particular, of their real estate boom. In this interview, he breaks down the Evergrande situation and places it in the broader context of China’s economic growth story of the past decade.
The big question is what is next for China and where China’s next stage of growth comes from. Chanos shares his views and draws the comparison to Japan. In the 1980’s there were many that thought Japan would surpass the US – but then they saw the same problems, a bloated banking system, a real estate bubble, export dependence – and they have instead had 30 years of “muddling through”. Chanos is only one view, and he has held an anti-Chinese economy view for a long time, but it is a worthwhile perspective to consider amidst all of the headlines we see about China’s inevitable economic rise. Beijing still has plenty of economic challenges to navigate if it wants to avoid Japanese-style stagnation and continue to enjoy the 7 or 8% growth rates it has enjoyed for the past few decades.
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