George Soros has quite a few cautionary words about the state of the Chinese economy. In particular, George Soros is gravely concerned about the status of Chinese credit markets in comparison to the country’s mounting debt problem. Bloomberg just ran a story on Soros’ prediction about the future of the economy of China, which measures in as the second largest economy in the world. Soros says that investors and the general public should be watching the Asian markets carefully, especially China, in the coming months for signs of a crisis on http://www.bloomberg.com/news/articles/2016-04-20/soros-says-china-s-debt-fueled-economy-resembles-u-s-in-2007-08 similar to what the U.S. experienced with its economy in 2007 and 2008. What has been the source of particular alarm lately for Soros and other international investors is the credit-growth figures for this past month for China. Instead of the forecasted 1.4 trillion yuan in new credit pumped into the Chinese economy, the government of China was responsible for extending an additional 2.34 trillion yuan. The fact that new credit extensions in China far exceeded the mainstream predictions shows that there is a definite trend in the Chinese government’s policy.
George Soros says that at least for the foreseeable future, the government of China appears to be prioritizing economic growth over addressing the serious concerns regarding the country’s increasing debt. Instead of spending money to pay down the debt on http://www.biography.com/people/george-soros-20926527 and get the country on track for sustainable long term growth, Soros says that the government of China is attempting to help keep afloat certain industries and enterprises that are currently failing. This also involves, according to Soros’ explanation, Chinese banks lending to other banks. While this may keep the country running for the short term, Soros says that these type of unsustainable credit extensions only serve to mask the bigger picture of uncertainty surrounding the Chinese economy.
Speaking of general uncertainty regarding the Chinese markets, George Soros predicts that investors will continue to be gun shy about investing in China, which could also contribute to a serious economic bump for the country. Given the magnitude of the effects from the U.S. economic recession in 2007 and 2008 that were felt around the world, Soros thinks investors are beginning to see the writing on the wall and are bracing themselves for a similar backlash.
Read more: George Soros Explains Chinese Economy
George Soros is widely consulted for his opinions on international investing and foreign currency markets. He has published over a dozen books on a wide range of topics and currently serves as the president of Soros Fund Management.