Will China’s Economy Smack the Pavement?

China (NYSE:FXI) is on its way toward an economic storm and it will hit the ground hard.

Hedge fund manager Jim Chanos of Kynikos Associates made this gloomy warning on Monday to MarketWatch at the 7th Annual New York Value Investing Congress. Chanos said that China’s numbers are falling faster than initially thought and noted that real estate sales in its peak months of September and October fell 40%-60% on-year and financial and real-estate stocks are down 30 percent from peak levels.

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He further noted that Chinese investors need to understand that a bailout doesn’t come without costs.

“The only way the Chinese government can continue to bail out everyone is to print more money, which will lead to inflation. But people are depositing money [in banks] at below inflation,” the fund manager said.

Adding to China’s dark picture is today’s report China’s economic expansion slowed in the third quarter to its lowest level in over two years. China’s GDP grew 9.1 percent from the previous year, but it represents the third consecutive quarterly growth decline. Second quarter growth was 9.5 percent and the first quarter saw 9.7 percent.

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