Hedge funds bet on slower China

European hedge fund managers are betting that China’s once red hot economic growth will cool dramatically in 2012, hitting companies, economies and commodity prices that have been fuelled by the world’s second largest economy in recent years. Managers are taking bets ranging from short positions on equity markets or the currency to buying credit protection on companies that export to the country. “China is an inflated castle in the air,” said Pedro de Noronha, managing partner at London-based hedge fund firm Noster Capital.