It’s well known that famed short-seller Jim Chanos is bearish on China’s growth. He’s said that the country is on “treadmill to hell” in terms of its finances, especially because of massive infrastructure projects that simply do not produce substantial returns.
Friday at the SALT Las Vegas 2014 conference, Chanos highlighted another reason why China’s economy is slowing — President Xi Jinping’s anti-corruption drive.
He said that the first wave of the clamp down impacted hotels, luxury goods, gift giving, real estate and more. He believes that alone has put a damper on China’s growth.
The second phase of this anti-corruption drive, says Chanos, will focus flow of money in and out of the country. That means you have to look at the areas around mainland China.
“Macao is next,” he said.
Macao has seen explosive growth over the last decade because of Chinese mainlanders who spend oodles of cash gambling there, but that’s not all they do. According to The Congressional-Executive Commission on China Annual Report 2013, $US202 billion in “ill-gotten funds are channeled through Macau each year.”
If Xi is serious about cleaning up his economy, he’s going to have to iron out the wrinkles in Macao. That, then, would put a damper on Macao’s growth and directly impact the gaming industry.
You gotta watch out when you roll the dice.
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