hina and the U.S. are locked in a sort of economic mutually assured destruction, in which we need them to lend us money and they need us to buy their low-priced products. So if China's economy gets into trouble, the U.S. will feel the effects. That's why reports of a possible real estate bubble in China matter to people in the U.S. The evidence supporting the China bubble case is compelling, but the challenge is to figure out when the bubble will pop and how China will react.
Before looking at these questions, consider the evidence suggesting a Chinese real estate bubble. The New York Times reports that super-star short seller James Chanos -- who bet right on the collapse of Enron -- has now set his sites on China's real estate market. Chanos views China as "Dubai times 1,000 - or worse" and suspects that Beijing is faking its reports of 8% GDP growth, according to the New York Times.
