China Tells

China is a phenomenon in 21 century. However, it is never clear whether one should long or short China as of today. Jim Chanos, a successful hedge fund manager, influenced by a recent Pivot Capital report, starts to get bearish on China and feels that China’s asset bubble is ’1000 times worse than that of Dubai’. Thomas Friedman, a New York Times columnist, argues back by stating that ‘I will never short a country with 2 Trillion Reserve in the central bank’. Michael Pettis is obviously furious about Friedman’s article and nail down the argument with a convincing piece (See Article from China Financial Market). Pettis argues that China’s 2 Trillion+ reserve is no doubt huge in terms of the percentage to Global GDP. However, in history the 30s US and 80s Japan had experienced similar numbers of reserve and both ended up in tears. In fact, the record reserve is more of a time bomb worth worrying as it is likely to result in over liquidity of domestic credit and excessive capacity. When the bubble bursts, it could be easily a pain of one decade or more, which has been experienced by Americans and Japanese. When the bomb explodes, as a million dollar question, is beyond any human being’s guess.

中国的2万亿美元外汇储备始终是一个热门话题。围绕着这个2万亿美元，牛和熊也开始了口水大战。牛说，中国这么有钱，我肯定不会卖；熊说，2万亿美元的储备，其实恰恰是最值得担心的问题。目前看来熊的论点似乎更有道理，但是要把握沽空中国的时间确似乎是一个不可能的任务。