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 Post subject: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 08, 2010 12:02 pm 
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Property Magnate
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Posts: 586
Location: Planet C.T.06
Quote:
April 8 (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.
Chinese state and local governments are among the most leveraged to property-related borrowings and the nation will “ultimately” have to nationalize a lot of the bad loans that will arise from the end of the bubble, Chanos said.

China’s Reserves:
China’s foreign currency reserves will be “one asset” that can be used to fund a cleanup of the banking system, he said. The country has accumulated a record $2.4 trillion of reserves, and $889 billion of U.S. government debt, partly a consequence of its exchange-rate policy.
Chanos was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp. The investor said he is short-selling Chinese developers as well as companies supplying building-related materials to the country, without identifying any stocks.

In a short sale, investors bet on declines in securities by borrowing stock to sell on the expectation it can be purchased at a lower price before handing it back.
Last Updated: April 8, 2010 00:12 EDT

http://www.bloomberg.com/apps/news?pid=20601109&sid=an0ehK2dtdXg&pos=11

_________________
_________________________________________________________
The double dip is propaganda, This Is A Depression.

Anyone thinking of buying property over the next 2 years needs locking up for their own protection.
(a slight variation of HouseBuyers quote) http://thepropertypin.com/viewtopic.php ... 08#p413608

“The most significant economic event of the era since World War II is something
that has not happened: there has not been a deep and long-lasting depression.”
(Hyman Minsky 1919-1996)


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 08, 2010 12:06 pm 
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Planning Tribunal Attendee

Joined: Nov 9, 2006
Posts: 1427
In other news a man who has substantial short positions in the shares of companies exposed to the Chinese property market has told people to sell the shares of companies exposed to the Chinese property market.


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 08, 2010 12:09 pm 
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Too Big to Fail

Joined: Nov 9, 2007
Posts: 3415
Treasury Holdings are big into Chinese property.


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 08, 2010 12:12 pm 
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Planning Tribunal Attendee

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Posts: 1427
kerrynorth wrote:
Treasury Holdings are big into Chinese property.


Just find me a property bubble where Irish people were not involved....


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 08, 2010 7:21 pm 
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Under CAB Investigation

Joined: Sep 14, 2009
Posts: 2002
johnboy wrote:
In other news a man who has substantial short positions in the shares of companies exposed to the Chinese property market has told people to sell the shares of companies exposed to the Chinese property market.


I don't know about you, but I like listening to successful smart investors who are prepared to risk millions on their convictions.


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 15, 2010 3:05 pm 
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Property Magnate
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Joined: Sep 28, 2009
Posts: 586
Location: Planet C.T.06
.Charle Rose interview with James Chanos (China on Treadmill to Hell)
.Recorded interview.
http://www.charlierose.com/view/interview/10960#
.
Quote:
But the fact of the matter is the game has to keep going. They’re on
this treadmill to hell, as I call it, because so much of their GDP growth
is construction -- 50 percent to 60 percent of this country’s GDP is
construction. We’ve not seen that in terms of a major country I think for
a long time if not at all.
And so for them to get off of stopping construction, you’ll see GDP
growth go negative very quickly. That’s not going to happen, because in
China it’s all about making the number. People are rewarded at almost
every level of government of making their economic growth numbers. The
easiest way to do that is put up another building.
So they’re really hooked on this sort of heroine of real estate
development to keep the numbers going. It’s not infrastructure. It’s not
airports, high-speed rail. There’s some of that. And it’s not experts.
Exports have been stagnant now for a while. And it’s not the consumer in
China, either, despite what people believe. It is construction, real
estate construction.

CHARLIE ROSE: says: Tom Friedman has waded in on this.
He said "Never short a country with $2 trillion in
foreign currency reserves."

JAMES CHANOS: Yes. The last two economies that had similar foreign
currency reserves relative to the size of their economy was Japan in 1989
and the U.S. in 1929. I’ll let that be the end of that discussion.

JAMES CHANOS: They can’t afford to. As I said, they’re on a
treadmill to hell. They can’t afford to get off this heroine of property
development. It is the only thing keeping the economic growth numbers
going.

_________________
_________________________________________________________
The double dip is propaganda, This Is A Depression.

Anyone thinking of buying property over the next 2 years needs locking up for their own protection.
(a slight variation of HouseBuyers quote) http://thepropertypin.com/viewtopic.php ... 08#p413608

“The most significant economic event of the era since World War II is something
that has not happened: there has not been a deep and long-lasting depression.”
(Hyman Minsky 1919-1996)


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 15, 2010 9:39 pm 
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Nationalised
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Joined: Jul 26, 2009
Posts: 14892
What's our exposure to this -> http://www.china-reo.com/index.php

Quote:
http://www.highbeam.com/doc/1G1-165718914.html

DYNAMIC duo Johnny Ronan and Richard Barrett continue to break new ground, backing a daring China Real Estate Opportunities drive to spend over EU600m on properties in Shanghai, Beijing and other centres.

The company is raising EU385m through a share issue and seeking admission to Londons' Alternative Investment Market. Interestingly, the initial property portfolio does not include the Xidan Centrepoint shopping mall, hotel and office complex in Beijing. CREO agreed to buy it last February, but the deal has since become embroiled …


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Thu Apr 15, 2010 9:51 pm 
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Neo Landlord

Joined: Feb 4, 2010
Posts: 222
Location: Athens of the North
China has capital controls. Foreign investors cannot repatriate gains made in china, and have to reinvest them in china AFAIK. A very long bargepole would be useful when considering investing in chinese property.


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Mon May 03, 2010 1:12 am 
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Nationalised
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Joined: Jun 24, 2008
Posts: 10232
Location: South of the Border (Down Mexico Way)
http://www.eeo.com.cn/ens/Politics/2010 ... 9086.shtml
Quote:
A Property Tax is Coming ... But Not as We Know It
Published: 2010-05-01
By Xi Si

According to information obtained by The Economic Observer, an annual tax on the property assets of Chinese property owners will be piloted in four of China's largest cities this year, but the tax will be different from the property tax that many first anticipated.

Instead, it's been revealed that the central government plans to trial a real estate tax (房产税), in the cities of Beijing, Shanghai, Chongqing and Shenzhen within the year.

After the tax has been piloted in these four cities, it will be applied on a national scale.

The real estate tax was previously only imposed on properties being operated on a commercial basis and not on owner-occupied residences. Now it seems likely that residential properties?that meet certain, as yet unspecified, conditions?will also be subject to the tax.
.....(cont'd)


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 Post subject: Re: China on ‘Treadmill to Hell’ Amid Bubble.
PostPosted: Mon May 03, 2010 10:07 pm 
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Joined: May 22, 2008
Posts: 1152
Location: Americas
China May ‘Crash’ in Next 9 to 12 Months, Faber Says

http://www.bloomberg.com/apps/news?pid= ... Kn4&pos=15

Quote:
“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.”

_________________
"This is a crisis. A large crisis. In fact, if you got a moment, it's a twelve-story crisis with a magnificent entrance hall, carpeting throughout, 24-hour portage, and an enormous sign on the roof, saying 'This Is a Large Crisis'. A large crisis requires a large plan. Get me two pencils and a pair of underpants." - Blackadder


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