December 9, 2010 24 Comments
This is an incredibly insightful analysis of the Chinese economic “miracle” by Jim Chanos, the renowned hedge fund manager. It’s a long one, so you might have to watch it in several sittings.
The level of meaningless construction spending and investment Mr. Chanos describes is mind-boggling and scary. At 28:50, he talks about there being 2.6 billion square meters of office space currently planned for construction. Mr. Chanos explains that this is equivalent to 30 billion square feet of office space, or a 5 foot by 5 foot cubicle for every man, woman and child in China. The question he asks is, when construction represents a staggering 60 percent of GDP growth, what happens when there is nothing left to build?
…When the Chinese bubble pops in the coming decade, we are going to be witnessing something spectacular indeed.