Soros is not optimistic about America’s prospects but he’s pretty positive about China.
From China’s People’s Daily Online
American billionaire financier George Soros said Sunday that China’s economy will grow faster than people expect and so will its global economic influence.
Soros said in Shanghai that China’s influence is set to grow faster than before, as its banking system is kept healthy and kicking, and a prompt and strong government intervention to rev up a slowing economy late last year.
Meanwhile, he was cautious estimating a recent rally in global stock markets, including in New York and London, given the liquidity problem in the Western markets which have made many investors still sitting on the sidelines.
“In many ways, Chinese banks have benefited from being isolated from the rest of the world and is in better shape than the international banking system,” he told an audience at Shanghai’s Fudan University.
Beijing’s strong oversight on banking practices and capital moves have helped to shield Chinese financial institutions from the worst of the global crisis, he emphasized.
“The influence of the state is also greater. So when the government says ‘lend’, banks lend,” Soros said. “This puts China in a better position to recover from the recession and that is in fact what has happened now.”
New loans by Chinese commercial banks surged to record levels in the first four months, spurring optimism over recovery prospects for the world’s second-largest economy, many analysts believe.
“China is going to be a positive force in the world and the market, and as a consequence, its power and influence are likely to grow. Personally, I believe it’s going to grow faster than most people now expect,” Soros said.
He also noted that China’s aggressive 4 trillion yuan (US$586 billion) economic stimulus program, announced at the end of last year, had bolstered Chinese economy gravely.
“If that program proves inadequate, it is in a position to apply additional stimulus. China is also in a position to foster a revival of its exports by extending credit and investing abroad,” he said.
He reiterated his view that because China’s economy is about one-third the size of the U.S. economy, it cannot replace the American consumer as the motor of the global economy.
He sounded a more upbeat note for China’s equity markets than for global markets overall, where he remained wary.
“I’m pretty cautious. Even though I’ve said prices are cheap, I’m not so optimistic as to put all my money into stocks or assets because I think that the outlook is fairly uncertain.
“I do, however, think that the Chinese economy is a promising economy. I think here it is more a matter of finding the right assets rather than saying that I’m not interested in investing.”