Billionaire hedge fund manager Jim Chanos, was on CNBC today and made the following statement about China:
“A lot of people are willing to say China will slow down,” he said. “The really scary thing is if you do the numbers and they cut back on construction it’s not a slowdown, and they go negative real fast…The fact of the matter is if they hit the breaks really hard, the economy goes into reverse. It doesn’t slow,” Chanos said. “Nobody will say that publicly because it’s unbelievable. But it happens to be the way the numbers work.”
Chanos is a smart guy, and he has been sounding the bear alarm in China for some time now, though he has never actually been to mainland China (Hong Kong does not count Jim), which I find so incredibly odd.
Leaving that perplexity aside for the moment, the thought of China’s economy going into the tank is something that few speculators seem to be contemplating. Most of us are too busy trying to figure out what the Federal Reserve will do next to worry about a breakdown of growth in China.
If the Chinese economy does go into reverse, then you can kick our deflation expectations into 7th gear.