World Economy

Chanos vs Roach over China's economic growth

Two heavyweights debate China

China's latest reading on growth has sparked a disagreement between two investment titans viewed as authorities on gauging the world's second-largest economy.

It started on CNBC's "Squawk Box" Wednesday morning, when former Chairman of Morgan Stanley Asia Stephen Roach—now a senior fellow at Yale University—called out famed short seller Jim Chanos for being so negative on China.

Read MoreChina 'panicking' in face of sluggish growth: Chanos

First-quarter GDP growth in China was, as expected, up 1.4 percent on a quarterly basis, while annual figures beat expectations at 7.4 percent.

John Phillips | CNBC

Chanos, the founder of Kynikos Associates, responded to CNBC via email, and took issue with the way the numbers were presented.

"1Q linked GDP was 1.4%, or 5.7% annualized. Big difference. The rest of the World presents GDP using the linked-quarterly method. Give my Yale colleague my best, but remind him that China is the only country that knows its annual GDP on January 1st of that same year."

Roach, in response, said: "Jim is wrong. And he doesn't get the full dump of data from the Chinese government."

"They recognize that there's a lot of volatility in the economy," Roach continued, "so they prefer to look at the year-over-year increase as a smooth measure of how the economy is progressing relative to the annual target."

Read MoreChina GDP puts to rest worst fears over the economy

Pudong skyline, Shanghai, China
Fraser Hall | Photographer's Choice | Getty Images

Citing Pudong near Shanghai—a vacant Chinese city in the 1990s that's now highly populated—Roach said Chanos shouldn't be fixated on China's so-called ghost cities, because the infrastructure has to be in place before the rural to urban migration.

Just back from China, Roach also asked: "When was the last time Jim was in China?"

Chanos readily admits he does not visit China, and he emailed CNBC Wednesday with his reasoning:

"As Professor Roach well knows, I have been graciously invited to the People's Republic of China by the Chinese Government itself, a number of times. But my mother long ago taught me to never attend a fight you've been invited to!"