Billionaire financier George Soros is not as impressed as some are with the rapid growth of the Chinese economy. He said recently, in a speech to the Asia Society in New York, that there are a lot of things similar with the Chinese economy now, and the U.S. economy in 2007 when credit markets stalled and created a global recession.
Soros made his fortune in international finance on bloomberg.com, so most people thinks he knows what he is talking about when it comes to the economy.
March figures showed the Chinese economy is worth 2.34 trillion Yuan on https://twitter.com/georgesoros?lang=en, which was almost double the predicted 1.4 trillion. Soros said the growth is fueled by debt, and he said the Chinese government has put growth ahead of mounting debt, and that is a bad sign of things to come. He said the growth cannot be sustained as it is, and is predicting it will have a hard landing just as the United States economy did in 2008.
George Soros said banks they are doing the same things U.S. banks were doing in 2007 that led to the recession. They are lending money to cover other debt and keep poor businesses going, instead of making investments that will last.
The Chinese government has run editorials in state newspapers responding to his remarks. Chinese economists on marketwatch.com say their economy is growing in key areas and that concerns like those voiced by Soros are exaggerated. They also say Soros has made predictions like this before and they stand behind their economy.
Soros has indeed made similar predictions before, but his $24 billion fortune shows that he often knows what George Soros is talking about. He once made $1 billion off an investment in the British pound in 1992, after predicting the British government was going to have to devalue the pound.
George Soros was born in Hungary, and grew up under Nazi occupation. He studied at the London school of Economics, and then went to the USA in the early 1950s. He started a hedge fund and an international finance company that was an immediate success. His hedge fund saw about a 20 percent annual increase in value each year for about 30 years.
Soros is also heavily involved in social issues and politics, especially on the liberal side.