London:
Hedgefund billionaire George Soros has warned against investment in China, which is witnessing a slowdown in the real estate boom, citing the example of Evergrande finding it difficult to pay off its debts in light of government policies aimed at is to contain the boom.
China is facing an economic crisis after a real estate boom ended with a bang last year, investor Soros said, DailyExpertNews reported.
Speaking at Stanford University’s Hoover Institution on Monday, Soros said President Xi Jinping may not be able to restore confidence in the beleaguered industry, which has been hit by a series of developer defaults and falling prices for land and apartments. .
Falling prices will turn “many of those who have invested most of their savings in real estate against Xi Jinping,” Soros said, adding that the current situation “doesn’t look promising.”
“Xi Jinping has a lot of tools available to restore trust – the question is whether he will use them properly,” Soros said.
China’s real estate boom was based on an “unsustainable” model that benefited local governments and encouraged people to invest most of their savings in real estate, Soros said.
Government policies designed to contain the boom made it difficult for indebted Evergrande to pay its debts, he added.
The developer is teetering under more than $300 billion in total liabilities, including about $19 billion in offshore bonds held by international asset managers and private banks on behalf of their clients, DailyExpertNews reported.
Government officials have been sent to the company to oversee a restructuring, but there is little clarity about what comes next. Evergrande has asked for more time, but some lenders seem unwilling to wait.
In addition, Soros, the legendary investor and chairman of the Open Society Foundations, said in September that asset manager BlackRock made a “tragic mistake” by doing more business in China.
He has criticized Beijing for its surveillance policies and crackdown on private companies.
Analysts were concerned that the collapse of Evergrande would pose greater risks to the Chinese real estate market, harming homeowners and the wider financial system. Real estate and related industries account for as much as 30 percent of the country’s GDP, DailyExpertNews reported.
The Chinese economy grew 8.1% last year, but slowing growth in the final months of 2021 suggests that the real estate crisis, renewed COVID outbreaks and Beijing’s strict approach to contain the virus are taking their toll.
The International Monetary Fund expects economic growth to slow dramatically to 4.8 percent by 2022.
(Except for the headline, this story has not been edited by DailyExpertNews staff and has been published from a syndicated feed.)