SHORT SELLER James Chanos, who made his fortune on Wall Street by foreseeing the collapse of Enron and other big companies, has declared that the next to fail would be China, due to the risks in its economy. This stands in contrast to the prevailing sentiments that the country would help lift the global economy out of recession.

James Chanos, a wealthy hedge fund investor, believes that China’s hyperstimulated economy is headed for a crash. He bases the belief on the buoyant real estate sector, which is rising on the basis of speculation, stating that it looks like “Dubai times 1,000 — or worse.” He also does not believe the growth rate of the country to be eight per cent.

In a recent interview on CNBC, James Chanos said,“Bubbles are best identified by credit excesses, not valuation excesses. And there’s no bigger credit excess than in China.”

Many who criticise the hedge fund investor believe that he has no knowledge about China. Jim Rogers, who established the Quantum Fund said, “I find it interesting that people who couldn’t spell China 10 years ago are now experts on China. China is not in a bubble.”

James Chanos, 51, who carries out investment through his hedge fund, Kynikos Associates, based in New York, has six billion dollars under his management. He is not the only one skeptical of China's boom, but is one of the most prominent detractors of the same.