Billionaire investor George Soros said in a recent article on Bloomberg there are striking similarities between the current Chinese economy on bloomberg.com and that of the United States in 2008 that led to a global recession. Soros is one of the world’s richest men, having made his fortune in international finance.
The Chinese economy is growing, but the latest figures should be seen as a sign of possible bad things, Soros said at a meeting of the Asia Society in New York. He said the Chinese government seems to be focusing on growth and ignoring its mounting debt. The latest figures on https://www.project-syndicate.org/columnist/george-soros show the economy was at 2.3 trillion yuan, which would translate to $362 billion in U.S. Dollars. That is way beyond the forecast of 1.4 trillion yuan.
George Soros said this is what happened in the United States in 2008, when banks were lending money to keep bad debts afloat and to make up for money losing businesses. He said a “hard landing” is unavoidable in China.
Soros is said to be worth $24 billion, and he made that through intelligent wagers on markets around the world. He is currently betting against the Chinese economy in his investments. He has been having a running argument with China on investopedia.com in a sense.
Soros said Chinese banks have more loans than deposits and that is a troubling sign. George Soros added that banks are lending money to each other to cover debts, and that is another bad omen. The problems with the Chinese economy have been pushed down the road, but that can only continue so long, he said.
Also similar to thee U.S. economy of 2007, is the Chinese housing market, which is growing and is in a bubble. Home prices in Shenzhen, for instance, have grown 62 percent in recent times.
While the Chinese economy is growing, the growth seems artificial, based on debt, George Soros explained.
Andrew Colquhoun, of Fitch Ratings, said he was also concerned about the Chinese economy that is more and more based on debt.
Chinese economists do not agree, and they say the concern about the debt levels are exaggerated. The Chinese say real estate growth, industrial growth and producer prices, indicate the problem is not as bad as some say.