The Ripple Effect of China’s Emerging Risks: George Soros 2008 Prediction

According to prominent billionaire investor, George Soros China’s economy is so fragile that it is headed towards an inevitable collapse. In an original article published on Bloomberg‘s website, entitled, “ George Soros Sees Crisis in Global Markets That Echoes 2008,” he speaks in detail about Chinese economic woes that he believes will lead to global downfall.
The market can unexpectedly turn around , but Soros doesn’t see many positive developments as Chinese leaders struggle with forging a new economic reality. The main problem is the vulnerability of manufacturing sector, despite China’s efforts to relinquish control of the markets. It may be a problem of too little effort, as the value of the manufacturing industry continues to decline as reflected in the January data reports.

Global markets rely on China’s international manufacturing trade more than any other industry. The downfall that George Soros refers to, is the 2008 financial collapse, when all major investments drop to levels below normal, which caused a deep housing crisis and left investors with worthless assets.

The widespread impact of a seemingly weak yuan is making every industry across the globe nervous, and Soros is encouraging China to re-think its focus. As a proposed solution, China intends to strengthen the yuan by the targeted date of 2020. Soros spoke at great length about the Chinese proposal, as a guest panelist at the Sri Lankan economic forum. Because in 2008, all markets were distressed by the financial downfall of the housing industry, Soros sees the challenge as China’s inability to find new markets, which threatens the global economy.

China can help bolster a weak economy if they can successfully bolster the value of the declining yuan. The problem for China is that similar to the 2008 decline, recent reports indicate a decrease in the value of International equities to the tune of 2.7 trillion dollars, this was released in data through January 2016.

George Soros is a billionaire industry baron and has reported steady gains in the hedge fund firm he started. His expertise is valued based on the performance of his funds, which posted an average of 20 percentage points gain, since its inception, with peak years, 1969-2011. Investors recall his prediction for a 1992 bet that netted him a financial gain of $1 billion. Bloomberg lists George Soros as having a net worth of $27 billion dollars, on its annual published index.

Market analysts rely on the prediction forecasts by George Soros due his ability to pick winners and based on the long term performance of hedge fund, Soros Fund Management. The website, Stockpickr, reveals that the firms’ successful stock picks have a value of $5.8 billion dollars, as of September, 2015.

Sources:
http://www.stockpickr.com/pro/portfolio/george-soros/
http://www.bloomberg.com/news/articles/2016-01-07/global-markets-at-the-beginning-of-a-crisis-george-soros-says