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In a recent article in the NYT called "China's Biggest Banks Squeezed for Capital" it seems that Chanos might be on to something.
"Last month, China’s four biggest lenders — Industrial and Commercial Bank of China, the Bank of China, China Construction Bank and Agricultural Bank of China — reported a combined 14 percent increase in total assets, to 51.3 trillion renminbi. That is roughly the size of the German, French and British economies combined.So far, the banks appear to have emerged unscathed. The Big Four lenders all showed declining levels of nonperforming loans last year. On average, such troubled loans at the four banks fell in 2011 to 1.15 percent of total lending, down from 1.34 percent in 2010.
But the worry is that, over time, the huge infrastructure, real estate and other projects that were the products of China’s stimulus-driven lending binge will fail to turn a profit. Borrowers, including local governments, may then fall behind on their interest payments and could default on their loans."
Jim Chanos previously disclosed that he was short the Agricultural Bank of China.
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