China is currently the world’s second strongest nation in terms of economic power. Only the US has more economic strength than China. While China is financially a powerful nation its monetary strength is going into decline. George Soros has a good idea about what is happening China and he wants the world to know that it is negative situation.
George Soros is a leading global businessman and lobbyist. His wealth and business success makes him one of the most coveted people on the planet in terms of wisdom and insight into business and political matters. Soros attended an economic summit meeting in Sri Lanka in January of 2016. He told the people in attendance that China is not in a good position and that they could trigger another global recession.
One of the biggest problems that China is facing has to do with the nation’s shifting economy. China is no longer a major producer in terms of production. The country has shifted to a consumer driven economy. One reason for this change had to do with capital controls. Capital controls is an economic tool that countries must use to keep their monetary system in check and balanced.
A foreign country could invest heavily inside of China and then call in those investments leaving the nation economically dry. Money that is tied up in banks can also be withdrawn all at once, if this happens it too could weaken China. Foreign exchange transactions are commonly used for stocks and bonds and the market was halted for two days in China during the month of August, 2015. The point is that China has to get its capital controls under control and this could bolster the economy into a positive direction.
Soros brought up China’s financial woes on Bloomberg.com because he wants people to see how important this nation is to the stability of Asia and for global markets. Do not forget that China is the world’s biggest trader. They might not be as economically sound as the US but they have been moving more exports in terms of products to other nations. This is important to know because it shows that China is linked to different nations of the world on many different levels.
This connection is why a global recession that is triggered by China could spread to the rest of the world. Soros warns that China must make changes to ensure that the nation is strong and that it can still continue to remain an effective economic producer. Soros’s views about China’s economic problems can be seen on the article George Soros Sees Crisis in Global Markets That Echoes 2008.