The China bust story is gaining increasing exposure, for good reason. The timing and character of the decline is incredibly hard to predict. I came upon an academic study by XU Xiaonian, a professor at a business school in Shanghai. It makes many salient points, and echoes Chanos comment that China is "Dubai times 1000," although in an understated way. The monumental stimulus of the last year has been heavily state-funded and directed at infrastructure and real estate (not manufacturing). The resultant loans are quite shaky. The story of when and if this investment goes bad could take years to unfold. Here is one chart from his study:
Nearer term, the Baltic Dry Index, which is one measure of the demand for commodity imports, continues to look soggy. The "sugar high" seems to be wearing off.
Lastly, the China-dependent commodity stocks are seeing holders vote with their feet. PCU is one example of many:
