- Mike Segar / Reuters
Famed short-seller Jim Chanos, the founder of Kynikos Associates, has been a huge China bear since 2009.
In a recent interview with New York Times op-ed columnist Joe Nocera, Chanos described the moment when he decided to look into betting against the country.
It happened around the time Kynikos Associates was looking at why commodities companies were making so much money. Chanos knew it had something to do with China, so he had some folks at his firm examine why China was buying all this iron ore, copper, and aluminum.
“I’ll never forget the day in 2009 when my real-estate guy was giving me a presentation and he said that China had 5.6 billion square meters of real estate under development, half residential and half commercial,” Chanos told Nocera.
That number made Chanos do a double take.
“I thought for a second and said: ‘Well, wait a minute, Alex. You mean 5.6 billion square feet. Because 5.6 billion square meters is roughly 60 billion square feet,'” Chanos elaborated in a follow-up interview on NPR’s Roben Farzad’s “Full Disclosure.”
“He turned to me, ‘I know. I triple checked the numbers. It’s 5.6 billion meters.”
Chanos was struck by the fact that half of that number was office space. In other words, 30 billion square feet of office buildings.
“That equals a 5-by-5-square-foot cubicle for every man, woman, and child in China,” Chanos said on the show.
“It just struck to the madness of just how much of the economy was a construction site. And that’s when we started to dig in and look at the numbers.”