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Pivot Capital report: China's Investment Boom

We mentioned a possible divergence of opinion between Niall Ferguson and Jim Chanos on the future of China's economic path in Monday's post, "Niall Ferguson: world tilts towards Asia" (although Niall does hedge quite a bit on possible outcomes for Asia & China towards the final paragraphs of his article).

Is China's economy sailing along thanks to a skillful implementation of government-directed "stimulus", or is the country's current prosperity and stated economic output merely a mirage?

Jim Chanos is on record saying that China is "Dubai times 1000" and that the government-directed economy is being propped up with phony GDP statistics. His firm, Kynikos Associates, has also been influenced by a report on China's economy from Pivot Capital Management:

"The Pivot Capital report was extremely popular in Chanos’s office and concluded, “We believe the coming slowdown in China has the potential to be a similar watershed event for world markets as the reversal of the U.S. subprime and housing boom.” "

I thought it would be insightful to follow-up Monday's post with a look at this research, so I'm currently reading Pivot Capital's report, "China's Investment Boom: the Great Leap into the Unknown" (pdf).

If you're inclined to read along and share your thoughts on China's economy with us, we'd appreciate it.
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