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Jim Chanos says China crash will be Dubai x1000

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Yesterday China raised its benchmark interest rates higher for the first time in 20 weeks to put a break on runaway bank lending that has fueled its stock market and property boom, and stimulated the economy to accommodate a 16 per cent crash in total exports in 2009. Is this the start of the end for the investment bubble in China? Jim Chanos is betting on it.

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Written by Peter Cooper

January 12, 2010 at 9:15 am

One Response

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  1. The crash in China won’t be like Dubai X1000. The difference is that in China there are people to consume where as in Dubai there are no people to consume. Real Estate Prices are held by demand and are covered by bank loans. Most people in China pay cash for their homes and others that finance have good credit or they would not qualify for a loan as loans are not easy to get in China.

    In China one also does not have X4 for daily margin trading like they do in the US. I can see exports dropping but unlike Dubai China’s market is not based on expats who could kicked out any day. Their market is based on huge local demand huge demand from abroad for products. As all those people in China start to make money many start to spend and local consumption is doing so well that they have taken over the US for the biggest car market. Cars in China are not as cheap as they are in Dubai either with import duties being around 150-200%+ depending on the type of car that is imported.

    All it takes is 1 visit to the wholesale markets in Guangzhou and a few other places in China and you will see how big their exports are thriving in China.

    Ed Note: Of course there a million consumers in Dubai, many very wealth, plus the tourists and the regional export trade – you are dead wrong on that assumption. China is about to allow shorting in its financial markets – and I imagine that will be the signal for the shorts to win. China is a huge bubble, just like Dubai was in 2008.

    Andy

    January 12, 2010 at 11:54 am


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