Economic experts, commodity analysts and investors are debating rather obsessively over the possibility of a bubble and a bust scenario in China.
Short-sell veteran Jim Chanos recently said he is finding the China story harder and harder to believe. According to Chanos, while the economic situation in China may sound positive, its economy can defy the laws of financial gravity only for so long. Chanos believes China’s asset prices are becoming unsustainable and that its economy is in a bubble and ready to collapse in 2010.
This is in sharp contrast to the views of widely followed billionaire and global commodities investment guru Jim Rogers, who has been passionately investing in China for the last few years. According to Rogers, China is not in a bubble and he believes its economy is on strong and sound foundations.
Now that Jim Rogers and Jim Chanos are warring over the China bubble, the question is : where does Marc Faber — the publisher of Gloom Boom Doom — fall?
According to CommodityOnline, he believes there may be a bust:
“There is excessive credit in China, but the oversupply of money has been used to build the infrastructure, education, and R&D, rather than consumed”, Faber said. “And that is the difference between China and US.”
Faber however, expressed concern about the bubble burst syndrome in China. But unlike Chanos, he does not see the Chinese bubble bursting so soon. “The China bubble will not burst soon. I don’t see it imminent,” he said.
“It is very difficult to pinpoint a day when China will implode, I don’t think it will happen right way,” Faber added.