Jim Chanos: China's 'Unprecedented' Real Estate Bubble Will Be 'A Doozy'

CNBC:

The bubble in China's real estate is unprecedented and companies exporting for the country's construction sector should be watched carefully, James Chanos, president and founder of Kynikos Associates, told CNBC Monday.

Read the whole story: CNBC

Comments

[delta7777]

04:51 PM on 01/26/2010

China is a vast and relatively young economy in terms of modern criteria.
Without hard figures as to China's real reserve demand capacity and economic elasticity
it is foolhardy do jump to conclusions as to bubbles.
With a population around 4 times the US, it is not warranted to draw simple parallels.

[mrspiffy]

10:48 AM on 01/26/2010

"This time is different." No...its not. The mother of all bubbles.

http://yieldpig.blogspot.com/

[martiniandabotoxchaser]

06:39 AM on 01/26/2010

If you work with China you are crazy not to demand cash payment upon receipt...saying that if China stops buying what little they do from us many business will be hurt, including heavy equipment manufacturers.

[lvdragonlady]

12:21 PM on 01/26/2010

Everything that the U.S. is currently buying from China SHOULD be made in America anyway, so let their bubble pop.

[yappnmutt]

03:44 AM on 01/26/2010

tokyo real estate bubble in the 50s and 60s didn't burst for 30 years and made thousands of millionaires.

chanos has no clue. he suffers from china envy.

[martiniandabotoxchaser]

06:39 AM on 01/26/2010

Different world....things more more quickly.

[yappnmutt]

02:46 PM on 01/26/2010

sustainable hypergrowth is built upon need not finance incentives. that's the difference. china will not have the capacity issues that blow up bubbles for years to come.

[littlepuffycloud]

11:52 AM on 01/26/2010

I don't think it's going to take 30 years to burst..that's the difference here. Bubbles seem to be larger and quicker to bust now.

[Balzac]

02:49 AM on 01/26/2010

At this point in history, China and the United States have embraced like old friends in a new era of diplomacy driven by social contact between common people.

President Bush's incident with the spy plane brought down by China in 2001 seems like it belonged in the last century. It was embarrassing for the USA, and China gained confidence from that incident.

Then there was the time when George Bush finished speaking at a joint press conference in China and he went the wrong way for the exit and found himself tugging on a locked door. This is what can happen to someone who doesn't understand China. Now we're seeing a new era of friendly understanding between our nations. What in the world would we do without China?

Jim Chanos is right to be skeptical if China is over-developing real estate. His advice may well be helpful to government planners in identifying a pattern of development likely run out of steam in the future. I remember seeing some very large and ambitious developments when I visited. Hopefully Chinese developers will focus on retrofitting some of these new developments for maximum efficiency.

[Balzac]

02:51 AM on 01/26/2010

在这个历史，中国和美国点已接受就像一个普通的人之间的社会联系，推动外交的新时代的老朋友。

布什总统与间谍飞机事件所带来的中国向下好像它在上个世纪属于。这是尴尬，美国和中国赢得了这一事件的信心。

那么，当时，布什在结束在中国的联合记者招待会上说，他的退出了错误的方式，发现自己在一个锁着的门拽。这是可以发生在人谁不知道中国。现在，我们看到了我们各国之间的友好谅解的新时代。我们做什么没有中国？

吉姆遮的怀疑是对的，如果中国被过度开发房地产。他的意见可能有助于政府规划确定的发展可能会失去动力，在未来的格局。我记得看到了一些非常大的和雄心勃勃的发展，当我到了。希望中国的开发将集中在改装的最高效率这些新的事态发展。

[Deli]

05:50 AM on 01/26/2010

China would like to kill us in our beds. Never forget that. We are playing into the hands of one of the worst offenders of human rights in the history of the world, right up there with Britain and the U.S., and that is the reason they will feel no qualms in burning us to the ground.

[GEM-592]

02:18 AM on 01/26/2010

China will never wane, just like the price of my house ... oh wait.

[NevadaPatriot]

01:45 AM on 01/26/2010

I also should point out that the majority of Chinese who have and continue to invest in residential real estate own their properties out right. Or at the very least owe very little on only 1 primary loan to the bank.

[NevadaPatriot]

01:40 AM on 01/26/2010

Jim Chanos is going to get burned.

1. He clearly fails to understand Chinese culture. There is intense pressure for Chinese to own a home. It is a culture normal. If you do not own a home it is likely that you may not be married.

2. Chinese prefer to invest in real estate and have plenty of savings.

3. Comment about Commercial Real Estate is total BS because this includes retail facilities for the domestic market. There is much growth in II / III tier markets with regard to domestic retail. The Chinese domestic market still has much growth in it. Especially in the western regions and tech.

4. Comment about hurting material suppliers- Will only hurt raw material exports such as Rio Tinto.
Cement, steel and all other primary goods are produced in China for the domestic market and export.

The real danger to the Chinese economy that he fails to mention over obviously does not understand is inflation. China experienced 11% to 17% inflation last year possibly more and cost of goods continues to rise making it difficult lower / middle income families to live. This will erode their buying power and could lead to social instability.

[unscum]

12:45 AM on 01/26/2010

"Fixed investment is forecast to reach 60 percent of Chinese gross domestic product this year, up from around 50 percent, he said."

And this is why China's vaunted economic growth rate is nothing more than a bubble induce mirage.

[Threedog]

12:26 AM on 01/26/2010

China's plan all along has been to bring the US to its knees financially. They knew it would be futile to try to match our military might.

So far, the plan is working. I worry that as the US economy continues to tank, what will the response of our MIC be? Will they get desperate, and try to use force to somehow regain their financial footing? Or will they be a third world that just spends every spare dime on their military outposts and resource wars?

Wow. I never thought I'd be typing these words about such a once great nation.

[unscum]

12:41 AM on 01/26/2010

Did you even read the article?????

[SteveEbenedicT]

12:23 AM on 01/26/2010

Anybody know how to read a chart?

FXP is looking like a nice orderly pullback, if Chanos is right this probably goes up.

Watch the Shanghai Index-doesn't look strong.

Not advising anybody to trade anything here.

[FoonTheElder]

11:34 PM on 01/25/2010

But I was told that everything that China does is golden.....just like I was told that about Japan in the 80s.

[mymarkett]

10:04 PM on 01/25/2010

double dip recession begins: http://economixx.100webspace.net/

[OntheContrary]

09:06 PM on 01/25/2010

China will be Chanos' Waterloo. The people who invested in real estate in China are the rich people who use cash not loan to buy the property. These people can hold on to the investment as it is better than holding on to their cash. They rather park their hard earn money in real estate than to put it in the bank. They don't trust the bank. At least in the long term, real estate value appreciate. Therefore, there is no bubble as long as the owner hold on to the property. You don't understand Chinese mentality, they are a very patient bunch of people and they will buy and hold and wait for the real opportunity to come around. Warren Buffett type investment mentality. Chanos has no clue what he is doing.

[unscum]

12:47 AM on 01/26/2010

And watch what happens to those real estate investment when this enormous real estate bubble finally bursts.

[PlayTOE]

08:50 PM on 01/25/2010

James Chanos is touting the China bubble but there is not any actual bubble in a planned economy like China has.
While it is true that some housing surplus exists, the number of people available to use these units is right there waiting as the job market expands (and it is expanding fast with previously western manufacturing jobs).

[denier denier]

12:32 AM on 01/26/2010

The article was about commercial real estate.