The Great China Crash?

Hmm this is some very interesting reading if you are long China or you think their GDP will grow at 8.9% forever. I thought it was interesting that with all that demand constrained all over the world they had such a high GDP growth. I could understand it when things were humming but who is buying all these cheap Chinese exports? This guy thinks its book cooking:

Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.

Also if you are a commodity bull you need to be ready to take profits since a Chinese collapse will destroy you.

Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.

That is a lot of cement and what are they supposed to build with all that? These China bears like Jim Chanos of Kynikos Associates think its lots of empty high rises and factories. The slow motion collapse seems to be happening already at least when it comes to Chinese retail:

And the bears also keep a close eye on anecdotal reports from the ground level in China, like a recent posting on a blog called The Peking Duck about shopping at Beijing’s “stunningly dysfunctional, catastrophic mall, called The Place.”

“I was shocked at what I saw,” the blogger wrote. “Fifty percent of the eateries in the basement were boarded up. The cheap food court, too, was gone, covered up with ugly blue boarding, making the basement especially grim and dreary. ... There is simply too much stuff, too many stores and no buyers.”

When the food court closes you have to be worried.