China May ‘Crash’ In 9-12 Months

4 May

Noted investor and publisher of the fabled “Gloom, Boom and Doom” report, Dr Marc Faber, warns that the Chinese economy may crash within the next 9 to 12 months.

From Bloomberg:

Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy,” Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen,” he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China.

China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month. As much as 60 percent of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fueled bubble in China may trigger a regional recession within a decade.

For those who doubt that China is currently experiencing the global mother of all real estate bubbles, take a look at these pictures from Time magazine, showing just how massive speculative over-investment in property construction has left China with literal ‘ghost cities’.

One Response to “China May ‘Crash’ In 9-12 Months”

  1. Ted O'Brien May 4, 2010 at 10:05 pm #

    We could do with a “ghost city” or two like that here. Provided they were well located.

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