Jan

11

For a while now, Outsourcing Opinions have been tracking on the economic developments and business interests of China (“Outsourcing – China‚Äôs Catching Up on English Literacy/Fluency“, “Outsourcing checks on China” et cetera).

News that China’s fast growth in recent years could lead to another real estate bubble bursting to crisis like that in Japan in 1980s and recently the United States in 2008.

Among the economies in Asia, China in particular is touted to be the one leading the way to global economic recovery however one investor, Jim Chanos (renowned for “having Enron’s number” and earning a fortune from its collapse) believes that China shows those same symptoms of 2008′s housing crisis. And what Mr. Chanos believes, people take note.

According to the New York Times, Mr. Chanos surmises that the republic’s surging real estate sector, buoyed by a flood of speculative capital could end up like what happened recently to Dubai “times 1000 or worse”. He also suspects the Chinese government to be faking economy figures to attract foreign investors.

Though much as I admire caution as a virtue, I’m leaning to agree with Shaun Rein of the China Market Research Group who believes, along with some investors that Mr. Chanos has no idea of what he is talking about China, its economy and how business gets done there.

In his article in Forbes, Mr. Rein is banking on the different Chinese business culture which is legendary for its frugality as well as the almost omnipresent Chinese government to be on top of things to head off any trouble before it gets to crisis-level.

Whichever one might believe, Chanos’ warnings can make people to keep their eyes open and stay on their feet while Mr. Rein’s information and assurances pushes the way forward. Work for the best, prepare for the worst.


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