By Daily Crux Editor Justin Brill:

Jim Chanos, head of investment firm Kynikos Associates and famous for his call to short Enron in 2001, has found his next big target.

Chanos and other China bears say the country has overcapacity in just about every sector of its economy, and the government's massive stimulus isn't working. They think China is simply covering things up with faulty statistics.

For example, they point to the huge reported increases in car sales in contrast to numbers showing little growth in gasoline consumption, which suggests state-run companies are buying huge numbers of cars and putting them in storage.

Chanos thinks the collapse of China could be just as bad for the global markets as the U.S. housing crash.

Traders interested in playing this trend could consider shorting big names like China Life Insurance, China Mobile, and PetroChina, or buying the UltraShort FTSE/Xinhua China25 Proshares ETF (FXP).

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