China has experienced exponential economic growth on http://www.nybooks.com/contributors/george-soros/ over the past two decades and recently established itself as the second largest economy in the world. It’s now a top destination for investors as they seek to take advantage of cheap labor and technology.
Despite the success, they Chinese economics will constantly be reminded that an economic crisis takes down even the strongest establishment. This fact is supported by the near-collapse of the US economy following the global financial crisis of 2007/08 that started in their territory. Even veterans like George Soros acknowledge they had never experienced a similar event in their history.
Critics feel the US financial community and government at large could have done much more to ensure fiscal responsibility and ethical practice in credit markets. It was observed that massive, undisciplined borrowing and lending practice precipitated the recession of 2008. George Soros, a retired investment banker, recalls how he had warned authorities to check such activity to mitigate the crisis.
In fact, George Soros has earned a reputation of forecasting such adverse economic occurrences. The recession of 2008 on http://www.forbes.com/profile/george-soros/ rendered millions jobless and even millionaires out of work. In 2011, George Soros warned Greek authorities of the consequences of failure to manage their national debt. Some few years later, the realities cited by Soros dawned on them as Greece collapsed. Even campaigns to bail the Greek economy out of trouble couldn’t resuscitate the patient. The Greece crisis threatened to split Europe in the end.
This time round, George Soros‘ hawk-eye has settled in China. The Chinese economy has been having adjustment complications since the turn of the year. Its woes had already impacted the global equity markets negatively. Soros read the signs early and warned of a looming crisis. Even in April, Soros remains unimpressed by the sudden improvements in real estate citing them as indicators of a similar event as the financial crisis of 2007/08.
George Soros feels that investors should be worried when banking systems register more loans and withdrawals than deposits. The increasing liabilities eventually force the system to crumble resulting in a global crisis. Soros burst this bubble while addressing an economic forum. Furthermore, the Chinese government seems to focus on promoting growth without checking the debt levels.
An Asia-Pacific economist has also added weight to Soros’ argument citing that the already unsustainable debt level cannot take any more additions. The Chinese now risk derailing so many years of progress. According to Mr. Andrew Colquhoun, China needs to slow down. Meanwhile, the Chinese authorities might need to borrow a few moral lessons from George Soros. In fact, they should listen more intently to his public forums and read a few of his books.
Read more: George Soros Highlights China’s Economic Troubles