21 avril 2010
April 21 (Bloomberg) — China’s “excessive” credit expansion and surging real estate prices are “danger signals” that growth is peaking, investor Marc Faber said. “There are some symptoms of a bubble building in China, with the increase in foreign exchange reserves, rapidly rising property prices,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview today. “From here on, the China economy will slow down regardless. Whether it will crash this year or later, I don’t know.”
China, the world’s third-biggest economy, yesterday ordered developers not to take deposits for sales of uncompleted flats without proper approval. This adds to curbs on loans for third- home purchases, increased down-payment requirements and higher mortgage rates announced in the past week, after property prices in 70 cities jumped a record 11.7 percent in March. China’s economy grew 11.9 percent in the first quarter, the most in almost three years, fanning concern that record lending is creating asset bubbles. The government has twice this year told banks to set aside more reserves and pace credit growth. “If you believe the government can steer the economy like a car, that’s not my view,” said Faber, who oversees $300 million at Hong Kong-based Marc Faber Ltd. Government measures “always lead to unintended consequences.” Faber spoke on the sidelines of the Asian Public Real Estate Association Forum in Singapore.
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8 avril 2010
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 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.