Why Jim Chanos thinks China could be the next Greece

[marmar]

(MarketWatch) China could be the next Greece and its debt woes may even exceed the European country’s in the next few years, predicts prominent hedge-fund manager Jim Chanos of Kynikos Associates.

“I joke to my Chinese friends, somewhat half-seriously, another three-four years they are going to be like my homeland Greece,” said Chanos in an interview, which will air this weekend on Wall Street Week, a syndicated business-news show hosted by Anthony Scaramucci, co founder of investment-management firm SkyBridge Capital.

The perennial China bear pointed to China’s debt-to-GDP ratio of nearly 300% and projected that the ratio is likely to balloon to 400% over the next few years. Here’s an excerpt from the interview:

“The problem is the credit story,” Chanos said. “China’s banking system is bloated and it’s basically taking on more and more leverage.”

Chanos declined to elaborate further when contacted for comments but he has been an unabashed critic of China’s debt-fueled economic growth and has been sounding alarm bells of possible hard landing for the world’s second largest economy for several years. A so-called hard landing can refer to a rapid economic slowdown that occurs typically as a government’s central bank is attempting to tighten fiscal policy and combat inflation. ...................(more)

http://www.marketwatch.com/story/why-jim-chanos-thinks-china-could-be-the-next-greece-2015-05-22