Chanos on China, again

Here are 2 very informatiove videos from Chanos, again. His main points are that because of the high risks inherent in China's economy:

• China's economy is primarily investment-driven requiring a continuous growth in the 9% range to keep people employed
• The 9% GDP growth manifests primarily in the construction, which is 60% of China's GDP
• Credit creation in China is running at 25-35% while GDP is 3-4 times less than that at 9%
• China's growth model is clearly not sustainable and is looking more and more like a bubble

Should the bubble in China pop, Chanos says the most hurt countries will be the commodity countries (Australia, Canada, Brazil) as well as the exporters (Germany).

Because of the above risks, and because the Chinese own consumer is largely "out of the picture" in terms of its GDP composition, Chanos says that Yuan may be overvalued, not undevalued as claimed in the West.

Interestingly, trade is only 5% of China's GDP, completely refuting the claims that China will manufacture and export itself out of any potential problems.