Topic: CHINA - the Bear Turns Five
18 November 2014
About the concert:
With his views on China’s hyper-stimulated economy well-known in the marketplace, Jim Chanos’ presentation delivered an indicting exposé of the fissures and fractures that have begun to appear and will inevitably (in his view, at least) cause a crash in both the stock market and the real economy of China in the not-so-distant future. Chief among the disturbing indicators of this less-than optimistic outlook are: engineered GDP numbers (“the only major country to know on January 1st precisely what its GDP for the year going forward will be”); state-owned enterprises dominating the landscape and stifling small business growth (“The Party picks sector ‘winners’ and the goals are not always economic“); oversupply in the real estate market (“enough square footage built to house every single man and women in China”) yet there are many ghost cities scattered with half-finished projects because of stratospheric prices and developer over-reach; and unrelenting credit growth designed to drive increased consumption, yet resulting instead in higher non-performing loans at state owned banks and spurring even more government stimulus. According to Mr. Chanos, the long-awaited shift from a fixed investment to a consumption based economy has not yet occurred in China, and in fact gross fixed capital formation has grown (not shrunk) as a percentage of GDP over the past 10 years. The promise of unlimited growth potential juxtaposed against these economic realities are signs that point to a financial bubble, not to mention the “irregularities” in transactions that have begun to surface in public and provide a glimpse into how the economic system has been self-perpetuated so far. To the chief forensic financial analyst, the tell-tale signs are ominous and the pattern all too familiar.
About the speaker: Jim Chanos (DC ’80) is the founder and Managing Partner of Kynikos Associates LP, the world’s largest exclusive short selling investment firm. Throughout his investment career, Mr. Chanos has identified and sold short the shares of numerous well-known corporate financial accounting scandals; among them: Baldwin-United, Commodore International, Coleco, Integrated Resources, Boston Chicken, Sunbeam, Conseco, and Tyco International. His celebrated short-sale of Enron shares was dubbed by Barron’s as “the market call of the decade, if not the past fifty years.” His wealth of experience in, and forensic approach to, financial analysis has led to his prescient views being sought after in many quarters including by finance ministers and financial traders around the globe.
Mr. Chanos is also currently a Lecturer in Finance and Becton Fellow at the Yale School of Management, teaching a class titled "A History of Financial Market Fraud: A Forensic Approach." Born and raised in Milwaukee, Wisconsin, Mr. Chanos lives in New York City.
For more information on Mr. Chanos, please visit: