The bear case: Why top investors are betting against China
As well as the most impressive growth story in global markets, China is also the biggest paradox.
By Louise Armitstead
20 Jan 2011
While the official data continues to paint a picture of an economic powerhouse, some of the most respected financial brains in the world are doing everything they can to “short China”.
Jim Chanos, the hedge fund manager who famously made millions by uncovering and betting on the demise of Enron, has said he is now betting against China.
His view is that China’s growth is based on a huge credit bubble backed by inflated property prices – and that the bubble is now so big that the Chinese government will not be able to engineer a soft landing.
He backed by Mark Hart, of Corriente Advisors, the American hedge fund manager who made millions of dollars predicting both the subprime crisis and the European sovereign debt crisis, who started a fund based on the belief that rather than being the “key engine for global growth”, China is an “enormous tail-risk”.
In London, Hugh Hendry, a former star of Odey Asset Management, has launched a distressed China fund at Eclectica Asset Management.