Jim Chanos CNBC/Getty
Jim Chanos, Financial Times's chief financial officer, said that Evergrande could be "far worse" than 2008's collapse of Lehman Brothers.
Chanos said that "the whole Chinese property market has been on stilts" after his famous bet against Enron earned him huge profits.
He said that China would need to find "new growth drivers" or shift somewhat semi-permanently to a lower level.
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Jim Chanos, the legendary short seller, said that Evergrande could be worse than 2008's collapse of Lehman Brothers. He made this statement in an interview with The Financial Times.
According to the FT, he added a bet against HSBC in his global short fund over the past year. This was due to the bank's exposure Chinese loans. In the weeks before the market-shaking liquidity crisis, reports earlier revealed that major investors such as BlackRock and HSBC increased their stakes in Evergrande bonds.
Chanos said that there are many Evergrandes in China, and Evergrande is one of them. His famous bet against Enron earned him huge profits. "But all developers look like this. "The entire Chinese property market is on a stilt."
According to Kynikos Associates founder, his primary concern was not that Evergrande would be a devastating episode by itself but that the property developer with a high degree of debt was only the tip.
He said that while it is not a Lehman-type scenario in many cases, it can be alarming because it is symptomatic for the entire economic model and the debt behind it. It is risky to try and deflate the bubble.
Analysts and policymakers in China have been concerned for years about China's ability to maintain its rapid, steady growth. This is despite the fact that the country has been working hard to reduce the huge amounts of debt it has accumulated from the private and public sectors.
Chanos stated that China must seek out "new growth engines" or shift somewhat semi-permanently to a lower level.
