Xinda Management Group Shenzhen China - BEIJING, April 27 (Xinhua) -- Some investment gurus, if they can be called that,periodically express their pessimism about the Chinese economy and short sellChinese stocks, but it turns out theirs is nothing but a game of crying wolf.
Their bearish tone has mostly proven to be a shortcut for securing handsome profits,with the so-called gurus scooping up bargains after their forecasts result in stocksgetting dumped.
The latest episode involved Kynikos Associates founder Jim Chanos, a keen short-seller who has been bearish on China for years.
He recently warned, "There is a credit bubble that's actually not only huge but gettingworse," saying China's real estate sector is plagued by asset inflation that does notgenerate enough cash to service the debt.
He dumped hefty Chinese financial and real estate stocks, inspiring the herd behaviorthat sent China's stock index plunging on Wednesday, Thursday and Friday.
However, this time, his words were not pure alarmism. China's economy is contendingwith a bumpy recovery, as 7.7-percent GDP growth in the first quarter fell short ofexpectations.
Investment, consumption and exports have grown at more tepid paces. Manufacturingactivity has cooled for months, and credit and property bubbles could be time bombs ifnot properly contained.
Premier Li Keqiang recently said the economy will have to "climb hills and cross ridges,"underlining the difficulties and challenges facing the world's second-largest economy, which has said goodbye to breakneck growth.
Nevertheless, it is unnecessary and premature to pile pessimism on the Chineseeconomy.
Credit bubbles loom large, but have been under tight oversight. At a special sessionconvened Thursday by the Standing Committee of the Political Bureau of theCommunist Party of China (CPC) Central Committee to review the country's economicsituation, the country's top leaders underscored the need to guard against potentialrisks in financial sectors.