User login
Get Benzinga's Best Trading Ideas For Free
Search
Search
Jim Chanos Says The Biggest Asset Bubble Is China
Kynikos Associates' Jim Chanos said this morning on CNBC and yesterday to Politico that the biggest asset bubble that he sees is China. Chanos said its the fixed income asset bubble in China.
"If you thought Dubai was bad a couple years ago, we did, it has nothing on China," said Jim Chanos.
Chanos added that China's GDP growth is coming on the back of the most massive fixed investment program anyone has ever seen. Chanos does not believe the GDP would be 9% if you applied real depreciation to the fixed asset investment.
iShares FTSE/Xinhua China 25 Index (NYSE: FXI) is trading down 1.01% in the pre-market.
Similar
Trading Ideas
I've seen similar "empty"
I've seen similar "empty" cities in China for the last 15 years. And over a few years, these cities have inevitably filled up.
The Tsinghua professor quoted in the original news report is exactly right in that regard. All of the previous rounds of physical infrastructure in China has paid off economically and socially.
There are two numbers which define China, and is far more important than GDP in any given year:
1) population: 1.3 billion and counting.
2) urbanization rate: 45% and climbing.
China's urbanization rate will rise to 70% by 2035. If you do the math, that means 325 million Chinese currently living in rural villages will move to urban cities within the next 25 years.
And if you do the math again, that means:
- for every square foot of real estate currently in existence in China... it'll be doubled over the next 25 years.
- it also means building 15 New York's from scratch over the next 25 years.
