Some European hedge funds are predicting that China's growth will slow down in 2012. The GDP growth forecast has been lowered to 8.7% for the fourth quarter of 2011. From 2003 to 2007, growth was at least 10%. One chief investment officer, Javier Pina of Javelin Capital, says that China is forced to stop their credit expansion. According to Pedro de Noronha, managing partner at Noster Capital, he has noted the following reasons for the downturn:
- The US has not returned to pre-crisis consumption levels
- Lack of corporate governance in China
- Bad bank loans
- Real estate bubble
Other managers have positioned themselves to profit from the slowdown by:
- Shorting Chinese equity markets using futures
- Short positions in the yuan
- Buying credit default swaps on companies that export to China
- Shorting natural resource companies that export to China
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