China On ‘Treadmill To Hell’ Amid Bubble

9 Apr

From Bloomberg:

China’s property market is a bubble that may burst by as early as this year, according to hedge fund manager James Chanos.

The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction, said Chanos. The bubble may begin to “run its course” in late-2010 or 2011, he said in an interview on “The Charlie Rose Show” that will air on PBS and Bloomberg TV.

China is “on a treadmill to hell,” said Chanos, who said in January the nation is Dubai times a thousand. “They can’t afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing.”

Property prices in China rose at the fastest pace in almost two years in February even after officials this year re-imposed a tax on homes sold within five years of their purchase to curb speculation and ordered banks to set aside more funds as reserves to cool lending. The boom in China’s real estate has fueled concern that China may face a collapse seen in Dubai that has hurt the ability of some of its companies to repay debt.

Since his January prediction, Chanos, the founder of Kynikos Associates Ltd, has been joined by Gloom, Doom & Boom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s property market.

Barnaby Joyce has been warning about the external threats to the Australian economy since October 2009.  With every passing month, more and more evidence coming from economies around the world – including those such as China that are vital to Australia’s economic interests – indicates that there is big trouble brewing.  While the Ken Henry-led Rudd Government slumbers on in La La Land, spending like drunken sailors, confident of an unending China boom to lift us out of debt, more and more economists abroad are predicting a China crash.

Barnaby is also the only Australian politician with the courage to publicly question the Rudd Government’s weakening of Foreign Investment laws, which have allowed foreign ‘investors’ to help spike Australia’s already unaffordable housing bubble, and put our ownership of vital national assets at risk.  Only Barnaby Joyce has had the courage to call out the Rudd Government for ‘selling the farm’, paddock by paddock.

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