George Soros Explains why China is Headed for Economic Trouble
George Soros has been in business for a very long time. His experience has taught him how to study a nation’s economy on opensocietyfoundations.org to discover weaknesses in its financial system. Soros has been using this principle all of his life and it has made him one of the richest people that has ever existed. So, when a billionaire of George Soros’s magnitude says that an economy is in trouble; people should take the time to listen to his reasons for saying these things.
George Soros is an investor by trade and a businessman. He has been eyeing China’s economy for years. China has the world’s second largest economy and in the not so distant past, it was a growing and productive economic power house. Now, China is in dark territory. While the country is not going to financially collapse and literally come to an end; the nation is headed toward a recession. This recession on bloomberg.com will not only impact China it will also harm other nations that are dependent on this economic giant.
China’s problems are many and some of the biggest issues that the nation faces has to do with their housing market, the transition to a consumer driven economy and a huge amount of unpaid debt. The housing market in China on georgesoros.com accounts for nearly 20% of the nation’s economy. With housing prices up and fewer people having the means to pay; this puts a strain on the housing industry. Businesses related to the housing industry are suffering as well. As a result more jobs are being loss and financial growth has been slowed down.
A consumer driven economy is something that China wants and needs. For years, China has relied on its manufacturing sector to carry it though. They produce millions of products for different markets all over the world and this had helped to create monetary strength for this nation in the past. Now, China’s factories and manufacturing industries are in serious decline. Millions of workers are being laid off and many of these people no longer have jobs. Since they do not have the money to pay for housing, cars and other goods; it is also having a huge impact on the economy.
China’s debt is also significant. The banks are issuing more loans and they are taking in fewer deposits. This simply means that too many organizations and individuals are defaulting on their loans and as a result there is less money to be used to help fuel China’s economy. George Soros points out that other factors such as capital controls, the Yuan’s valuation and the withdrawal of certain businesses are also negatively impacting the Chinese. George Soros wants people to know that China can turn things around. They are taking the necessary steps to do this right now. However, if the nation does not continue to correct this problem; recession will probably impact the country within a short amount of time.