Chinese Yuan: Crossing a Tightrope

A looming Warning from Famed Forex Trader

Renowned billionaire and investor George Soros stated and warned that the surge in China’s growing debt may bring the world’s second largest economy closer to a financial crisis similar to the crisis that crippled the U.S. back in 2008.

The financial crisis the U.S. faced back in 2008 was caused by the collapse of a housing bubble a year prior which triggered a failure of a great number of financial institutions in 2008. Despite the event originating from the U.S. the crisis had a far reach and had an impact on a global scale evident effects were a depression in trade, investment, and growth. Even now the U.S. and those that were affected by this crisis are still working to dig their way out.

The totality of China’s social financing, which is the measurement of the economy’s credit, gained an additional 15.8% last March which translates to 22.4% trillion, more than twice the country’s gross domestic of $10.4 trillion. This data of China’s debt bubble has earned the concern of analysts.

Soros’s warnings only earned the ire of the Chinese government who responded by attacking the renowned investor in a newspaper article. However, Soros is not the only high profiled investor to be alarmed with China’s growing debt. Founder of Hayman Capital Management, Kyle Bass, placed a large bet against China’s currency, stating that the country’s rising debt will be the one to cripple it.

Indeed, China’s economy has started to diminish after the post of its double digit growth a few years prior. Since then, the country’s GDP growth has slowed down to economic levels that have not been observed in almost a quarter century.

Comments are closed.