China’s Real Estate Market Is Holding Up The Country’s Economy But That Trend Won’t Last Long According To Investment Expert George Soros
No one really knows what is going on in China, according to billionaire investor George Soros. But Soros has enough information to know that China is heading for what he calls a “hard landing,” and the government on Investopedia is trying to do everything it can to make that landing softer. But according to one of the wealthiest men in the world, that’s easier said than done for several reasons. The first reason is China’s banks have more loans than deposits, and bank assets don’t look as stable as they used to be. George Soros also told a group that attended an Asia Society event in New York recently that bank liabilities are troubling as well.
Mr. George Soros told the group that China banks are lending money to each other, and that creates an element of instability and uncertainty. If this trend continues, and Soros thinks it will, then the government will have to step in once again and bail the banks out. Banks are trying to cover bad debts and keep China enterprises alive. That is the same situation that developed in 2006 and 2007 before the 2008 meltdown on Bloomberg, according to Soros.
The other troubling thing going on in China is the housing market. George Soros said house values in the top cities have increased by more than 62 percent, and that trend could continue for a couple of years.
Soros claims China won’t be able to sustain the debt that is accumulating, and that’s one of the reasons he is betting that the yuan, China’s currency on https://www.opensocietyfoundations.org/people/george-soros, is going to depreciate by at least 30 percent over the next couple of years. The Chinese government has said it will prevent that from happening, but Soros thinks that it is inevitable.
The bottom line, according to Soros, is another global economic meltdown that rivals the 2008 financial crisis is going to take place. China has its fingers in too many financial and economic pies around the world to avoid a global crisis. Soros believes he is right, and based on his track record, George is right most of the time when it comes to predicting events that change the world’s economic dynamics. If China continues to lose manufacturing business and if the government can’t get their consumer-driven economy working the way they predicted, the global market is going to have a tough time over the next five years. Soros also said the recession is already happening in countries in Europe, Asia and South America, and the United States is next.