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"It's like a horror movie. People like to watch, but don't want to be in it," quips economist Andy Xie about his popular lectures where he predicts a collapse in China's property and stock markets.
The former Morgan Stanley economist is among the more moderate of the bearish voices that have called the 'China crash' since the late 1990s. The more extreme doom-mongers have been forecasting everything from a property meltdown and debt crisis to full-blown economic recession and even political revolution.
Yet China has consistently defied the odds, projecting itself as a single-party-led export powerhouse with absolute hold over its financial system and a government with deep pockets. Investors have been rewarded with a decade of double-digit economic growth and a property market that has multiplied several times over the years.
But this year seems different. Rising funding costs, a more volatile yuan currency, money market liquidity crises and companies defaulting on bond payments, which is rare for China, all have raised concerns that this could be China's Year of the Bear.
Will the bears finally be able to say "told you so"?
"It's going to be big, it's going to be historic, and probably going to be this year," says Gordon Chang, a Chinese-American lawyer and columnist who's been predicting a crash in China for the past 15 years or so.
Xie, who has a decent track record in predicting major twists and turns in China's markets, is, however, mindful of how those who queue to hear his talks are agnostic when it comes to forecasting the definitive China crash. "They pay to listen to me, get scared, and then go out and feel good again. It's entertainment," he says.
BUBBLES AND PERMA-BEARS
There are varying scales of China bearishness.
Moderate doubters, such as Xie, fret more about short-term asset bubbles than about the country's long-term ability to reform and evolve. Hedge fund manager Jim Chanos, who founded Kynikos Associates LP, has made money from short selling Chinese commodity stocks, while Aberdeen Asset Management fund managers have long been 'underweight' China due to concerns over the transparency and maturity of businesses there.
To be fair, some short-sellers have enjoyed brief successes, such as when the Shanghai property market fell 40 percent in 2005-06 and the stock market slumped in 2007-08.
Despite being challenged and marginalised, the die-hard pessimists remain steadfast. These 'perma-bears' say China's export-driven, investment-fuelled economy is inherently unstable, not to mention the moral hazard wrought by