World Economy

Forget Chanos! Cat CEO fights back on China

CAT CEO: Global outlook a mixed bag
CAT CEO: Global outlook a mixed bag

All of Caterpillar's businesses in China are "doing well," which was evident in the 30 percent increase in first-quarter sales there, Chairman and CEO Doug Oberhelman told CNBC on Thursday, after the heavy equipment maker announced a beat on earnings and revenues.

Oberhelman recently visited China and came away optimistic about the execution of the company's strategies there. He did acknowledge the challenges facing the Chinese construction industry, but felt well-positioned compared to his competitors.

Read MoreCat CEO: Earnings beat on better US, China growth

Machinery made by Caterpillar operates in Tianjin, China.
Bernardo De niz | Bloomberg | Getty Images

"The bright news for us even with all the risk we see and the possibility of other risks coming in China, our business is building in China," Oberhelman said in a "Squawk Box" interview. "Our dealers are investing. We're expanding our dealer model throughout the geography of China."

As for the Chinese economy, it advanced at its slowest pace in 18 months at the start of 2014, but the 7.4 percent growth rate reported last week for in the first quarter was a bit higher than expected.

China's manufacturing activity contracted for a fourth-straight month in April. But the flash Markit/HSBC Purchasing Managers' Index released earlier this week did show some improvement from March.

"You never know what's going on in China from the numbers they're putting out," said Austan Goolsbee, former Council of Economic Advisers chairman under President Barack Obama.

"So a lot of times looking at companies doing business in China and how their revenues are doing tells you a lot about what's going on in China," he added during the Caterpillar interview, while guest hosting on "Squawk Box."

Read MoreChina GDP puts to rest worst fears over the economy

In Caterpillar's earnings press release, Oberhelman described what the company expects from the world's second-largest economy: "Our outlook assumes that China's economy will grow near 7.5 percent in 2014, similar to the past two years. That rate of growth should support improvements in the machine industry and increase commodity demand."

Based on China's slowing economy, Caterpillar has been on the hit list of closely followed short-seller Jim Chanos, who announced his short position in the stock last July at the CNBC-Institutional Investor Delivering Alpha Conference.

Earlier this month, the founder of Kynikos Associates said in a "Squawk Box" interview that he's "absolutely" sticking with his bet against the heavy equipment maker.

Chanos also defended his negative feelings toward China last week, when former the chairman of Morgan Stanley Asia, Stephen Roach, called the hedge fund manager out on CNBC for his China "fixation."

Chanos didn't immediately respond to a CNBC request for comment Thursday.

Read MoreChanos vs Roach over China's economic growth

Oberhelman did acknowledge the political risks in China.

"Chinese leaders are in the midst of major reforms to transform the world's second largest economy to a more sustainable growth model while maintaining social stability," he said in the earnings statement. "In the short term, these efforts could impact the economy and the industries we serve."

—By CNBC's Matthew J. Belvedere