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Chanos Still Bearish On China

“China’s economy is showing real signs of weakening, particularly in real estate, and even could tip into a recession, hedge fund manager Jim Chanos told CNBC.

Though the nation has been looked on as a key driver of global economic growth, Chanos for months has been sounding warning signals about China and the precarious nature of its economic surge. He said a recent visit by members of his investment team found a slowdown in housing sales as well as a decline in prices.

“The cracks are spreading in the facade,” he said. “You’re seeing real estate firms shutter, sales offices closed down. Some of the engine behind the boom is at least beginning to sputter.”

At least on the surface, the biggest perceived problem with China has been inflation.

The Chinese central bank has responded to overheating in its economy by raising interest rates four times since October 2010.¬†Inflation has subsequently cooled, slowing to 5.3 percent in April, but the economy is still roaring with a 9.7 percent increase in gross domestic product for the first quarter.”

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