China has the world’s second largest economy and is a powerhouse nation. While the Chinese have a financially strong and industrious economy; the country is starting to lose it economic standing. There are many reasons as to why China’s economy is slowing down and billionaire George Soros gives an explanations for these problems.
Soros is a man that understands business and the economy. He ranks as 30th richest person in the world on georgesoros.com and he has more wealth than many third world countries combined. Soros made his massive fortune through investments and betting against national currencies. One thing that George Soros does well is to analyze a country’s financial stability and then make investment decisions based off of what he sees.
When it comes to China, George Soros sees a bad situation. The first negative thing that Soros reveals about China has to do with its debt. China is having a hard time keeping its debt under control. George Soros stated that most of the money that banks are taking in is being used to cover bad debts and to keep failing enterprises in the black.
Another major problem that is messing up China’s economy has to do with the banks having out more loans and not enough deposits. Right now China is deferring this problem on Biography by having banks lend to each other but this type of activity can only be sustained in the sort run.
China’s housing situation is currently in a bubble. Housing prices are soaring and eventually this bubble will burst. This is similar to what had happened in the US before the recession of 2008 hit. China’s industrial output has significantly slowed down. When nations stop demanding goods this will cause producers like China to lose money.
Their money and businesses is no longer aiding the nation and since their departure; China’s economy is now suffering. Ultimately, China is going to have to make some major changes within it economy if they want to remain the world’s second largest economic competitor. George Soros also claims that if they do not make the necessary changes to keep their economy afloat, it will go into a recession.