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Soros not impressed with China economy

China has the second largest economy in the world, and it appears to be booming though not everyone is impressed. Billionaire George Soros is one of those taking a more negative outlook, saying in a Bloomberg article that the Chinese economy is very much like the economy was in the United States that led to the crisis and recession of 2008.

Soros is one of the world’s richest men, and he built is $24 billion fortune on international finance. He knows the economy on, and when he speaks people pay attention.

At a meeting of the Asia Society in New York, recently, he said China’s March credit growth figures are a bad sign of things to come, and that overshadows the growth of their economy. The amount of new credit in March was 2.34 trillion Yuan, which was nearly double the projected 1.4 trillion. George Soros said this shows the Chinese are putting growth ahead of controlling debt. He said this is not sustainable, just as it was not in the United States in 2008. He said China has more loans than deposits, which shows trouble on both the assets and liabilities sides.

Another similarity with the United States economy of 2007 and 2008 on is the growth in the housing market. In some areas of China, housing prices have risen by 62 percent in a single year. The real estate is in a bubble, and that is what burst in the United States, that led to the financial crisis and recession.

Similar to the situation in the United States in 2007, banks are lending to banks, and are lending to cover other debts and to keep poor businesses afloat. He said a “hard landing” for the Chinese economy is unavoidable. The Chinese government has been aware of his dire predictions and have responded. In editorials in state run media, the Chinese government says George Soros – and others – are blowing the debt issue out of proportion and noted that Soros has made similar predictions in the past.

Soros did praise China’s move to link the yuan to several other currencies instead of just the American dollar. He said that should help with stability of Chinese currency.
Read more: Soros Not Impressed with china Economy

George Soros was born in Hungary, and grew up during World War II under Nazi occupation. After the war he got a degree in economics in London. In the early 1950s he moved to the United States and stated an international finance company. His hedge funds earned about 20 percent a year for 40 years, which is part of what made him so successful. Soros is now involved in philanthropy, and is involved in politics to some degree. He has financed democratic candidates for president, and other liberal causes.

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