02/27/10 Stockholm, Sweden – With over 10 trillion yuan in Chinese bank loans disbursed in 2009, and more trillions on the way, George Soros, chairman of Soros Fund Management, remains concerned China’s economy is overheated. In a recent Hong Kong interview he explains how a hard landing could be in the making.
From MarketWatch:
“Caixin: What is your attitude toward China now? Positive or negative?
“Soros: I’m very cautious, until the economy cools off a little. When it does, I will be more optimistic again.
“Caixin: In 2009, Chinese banks issued 10 trillion yuan in new loans. The government has said there will be another 7.5 trillion yuan in loans this year, although banks loaned more than 1 trillion yuan in January alone. Do you think this unprecedented credit growth will eventually lead to overheating, inflation and harsher policy tightening? Do you worry about the potential risk of non-performing loans in the medium- to long-term?
“Soros: The overheating, the inflation, the harsh policy tightening is happening right now and it will continue to happen until the economy cools off. And with this explosion of credit, there are bound to be non-performing loans in due course. The extent depends on whether it is a hard landing or soft landing.”
We’ve seen the consequences of a credit bubble here in the US, and now we may see just how ugly a Chinese version may look. Soros goes into more detail on the bubble aspects of the Chinese economy, as well as how China’s currency revaluation may end up panning out, in MarketWatch’s coverage of froth in China’s economy.
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
“Caixin: In the longer term, how can the United States address its deficit problem?
Soros: The current account deficit of the United States is already declining, and I expect it to continue to decline. That is a very healthy development but a very painful one. It is particularly difficult to pursue this course as long as the dollar-renminbi exchange rate is fixed.
Is Soros on crack? What does he mean the current account defecit of the US is declining? It’s definitely not declining. ”
Maybe using some twisted logic the rate of increase has reached a temporary inflection point but the current account deficit of the US is NOT declining.
China is not our friend. There are many that try to convince us that they are and we are tied together. Only as long as China wishes it to be. Be warned.
Like 99 cents is so much lower than 100 cents. Pitiful