Recently, George Soros noted that China’s economy, which is fueled by debt, is similar to the United States economy prior to the 2007/2008 crisis. According to Soros, the country’s credit growth on http://www.bloomberg.com/news/articles/2016-04-20/soros-says-china-s-debt-fueled-economy-resembles-u-s-in-2007-08 registered in the month of March should be taken as warning sign. This situation portrays that the government is prioritizing growth over the management of debt. The surge in the new credit enabled China’s economy to register impressive growth in March, thus causing the rebound of the property sector. George Soros noted this situation was registered in the United States between 2005 an 2006.
Soros said that the money provided by the banks is required to keep loss-making businesses afloat. Lately, Soros has been caught in a war of words with the Chinese administration on http://www.forbes.com/profile/george-soros/ owing to his views concerning China’s economy. Early this year, Soros pointed out that he has been betting against the Asian currencies. This is because the likeliness of a hard landing in China was extremely high. Xinhua, a state run news agency refuted this claim in an editorial noting that he had made similar predictions in the recent past.
Additionally, Soros asserted that the most banks in the country have more loans as opposed to deposits. The country is also facing challenges with both the asset side and the liabilities side. According to him, banks were lending to each other. According to George Soros, this situation was aggravating the instability and uncertainty concerns. He also added that the country was deferring the problem, thus increasing the risks of economic crisis.
Soros is not the only person who is concerned with China’s borrowing. Andrew Colquhoun, Fitch Ratings’ head of Asia Pacific sovereigns on https://www.project-syndicate.org/columnist/george-soros, noted that what is driving the economy at present might end up derailing it in the future. He said this during an interview in New York where he also added that they were losing confidence in the Chinese government’s dedication to structural reforms. However, HSBC Holdings Plc’s, Qu Hongbin, thinks that concern about China’s economy are overblown. In a speech, Ma Jun, the central bank’s research bureau chief economist noted that recent growth in real estate investment, industrial value addition, and producer price indicate a better economic outlook.
This information was originally reported on George Soros Notes Similarities Between China’s Economy And The U.S. Economic Crisis
About George Soros
George Soros is the founder of the Soros Fund management as well as the Open Society Foundations. He was born in Hungary in 1930. George Soros fled to England in 1947 during World War II. In England, Soros went to the London School of Economics before settling in the U.S. where he made a big fortune through Soros Fund Management. Soros has been an active philanthropist since 1979. He has helped and supported different initiatives through his own funds. Soros is an author and has written over twelve books including 2014’s, The Tragedy of the European Union.