A veteran investor says China’s banking sector is in free fall and the downward spiral could wipe out $4 trillion or more from the Chinese economy.
Kyle Bass is the Chief information officer at the Hayman Capital hedge fund.
He says China’s once booming real estate sector is collapsing. Major developers like Evergrande and Country Garden are buried under debt. While a former Beijing official said China now has enough empty homes to house three billion people.
Mr. Bass also touched on the country’s local property market. It’s financially backed by local governments under China’s communist regime. That $13 trillion market is also grappling with heavy debt and defaults. Mr. Bass says “We don’t even know where the bottom of that market is.”
For comparison, U.S. banks lost about $700 billion during the Great Financial Crisis in 2008.