Friday, June 12, 2015

China Could Be The Next Greece.......

China Could Be The Next Greece


China could be the next Greece and its debt woes may even exceed the European country's in the next few years, predicts prominent hedge-fund manager Jim Chanos of Kynikos Associates.

"I joke to my Chinese friends, somewhat half-seriously, another three-four years they are going to be like my homeland Greece," said Chanos in an interview.

He pointed to China's debt-to-GDP ratio of nearly 300% and projected that the ratio is likely to balloon to 400% over the next few years.

"The problem is the credit story," Chanos said. "China's banking system is bloated and it's basically taking on more and more leverage."

Chanos has been an unabashed critic of China's debt-fueled economic growth and has been sounding alarm bells of possible hard landing for the world's second largest economy for several years. A so-called hard landing can refer to a rapid economic slowdown that occurs typically as a government's central bank is attempting to tighten fiscal policy and combat inflation.  HE HAS BEEN RIGHT SO FAR!

China's total debt hit $28.2 trillion in 2014, equivalent to 280% of its gross domestic product, according to The Wall Street Journal.

Chinese monetary officials earlier this month lowered interest rates to combat a worse-than-expected economic slowdown as companies and governments struggled under heavy debt.

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