In June, his blog post about the financial repression of the Chinese banking system had New York Times columnist and Nobel Prize-winning economist Paul Krugman warning about a lurking time bomb as savers pull their money from the banking system. “The trade over the past two years has been to be short China and go long Chinese corruption,” he says.
The trade has been a winner, with commodity prices weakening and Chinese stocks cooling. “But Macau casinos, and companies that sell $500,000 watches and $3000 a bottle cognac have been very strong. These are straight derivatives of Chinese corruption,” Hempton says.
Long time China watcher directed me to this piece in the Fin Review
The observations on China are in the last few paragraphs. However, the body does contain some interesting insights into professional short sellers.