You should read this piece by Michael Pettis.China’s foreign reserves are certainly huge. They add up to an amount equal to about 5-6 % of global gross domestic product.Perhaps someone more intelligent that I can tell me why Pettis is wrong. But I can't see any holes in his logic.
But they are not unprecedented. Twice before in history a country has, under similar circumstances, run up foreign reserves of the same magnitude.
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Well, the video of the recent speech by Chanos had some clues about =how= one would go about "shorting China": One would look at companies and economies outside of china that supply commodity raw materials to their over the top construction boom. Copper, iron ore, various extracted items of all sorts.
In the 30's the major suffering economies had some sympathy for each other, though of course domestic considerations came first. Same for the US and Japan in the 80's. But is anyone going to care about assisting China when it crashes?
Not me.
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