China Special Report from The Economist

A must read series of China articles published by The Economist in June 2011.

Rising power, anxious state

Hedge-fun titan John Paulson got burned by a China company

Have you heard of Muddy Water Research? A so called equity research firm specialized in shorting Chinese companies listed overseas via reverse takeover. Muddy Water has attacked 4 companies since last summer and the first three ones were small- and micro-cap Chinese companies traded in the U.S. The company now goes after the big fish and its last prey was a Chinese company called Sino-Forest traded in the Canadian Stock Exchange.

Sino-Forest had over $6B market cap before the attack and John Paulson, the renowned hedge-fund manager, owns about 14% of the company. Since the short attack on June 2nd, the company's stock has plunged from 20 to 5, or over 75%. At one point of time, Paulson had more than $300MM paper loss.

Read more about the story.
Big Funds See Red in China    by WSJ 6/9/11
Sino-Forest clobbered by short-seller's report   By Reuters 6/3/11
Sino-Forest Plunges as Short Seller Block Targets Stock Owned by Paulson  by Bloomberg 6/3/11

Stephen Roach is bullish on China

Nowadays, it is not so easy to hear a positive voice about China. But here comes one from Stephen Roach, who is a Yale faculty and the Non-Executive Chairman of Morgan Stanley Asia. More importantly, Roach is a well-known long-time bear.

Here is his recent bullish view about China

Ten Reasons Why China is Different    May 2011

Will China have a debt problem?

We all know that the Chinese government has shoveled 4 trillions Yuan since 2008. But how much debts do central and local governments carry? A few recent articles may give us a clue...

The Trillion Dollar Question: China’s Local Government Debts Mystery Revealed    06/2/2011
China always has more debts than you think        06/02/2011
China Economy: Clean-up Of Local Government’s Debts    06/01/2011
China to clean up billions worth of local debt   5/31/2011