ECONOMYNEXT - A falling Chinese currency is de-stabilizing the world, and the country is trying to transfer its problems to the rest of the world, where the makings of a crisis is seen, investor George Soros said.
"China has a major adjustment problem," the Hungarian-born US investor told an economic forum in Colombo.
"It has a lot of choices. It can actually transfer to the rest of the world its own problems by devaluing its currency. That is what China is doing."
"The exchange rate is now dropping and it is de-stabilizing the rest of the world. China is now inflicting on the rest of the world these deflationary pressure.
He said deflation was bad as people tended to repay debt.
The current environment reminded him of the 2008 crisis.
"I would say it amounts to a crisis," Soros said. "It is just that we are at the beginning of that. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008."
Soros said he had told his investment managers to be 'very very cautious'.
Many economists and policymakers in the US also has a tendency to blame China for many troubles and try to push up its currency claiming that is manipulating the currency.
China doesn't actually have a reserve currency that other countries peg to.
US attempts to push up China's currency goes back a long way. In 1934 the US bought large volumes of silver to push up China's currency, forcing the country to abandon the silver standard.
China has had loose policy in the past few years and it also upped state spending to boost growth as the US also loosened monetary policy, firing a bubble.
"China has a major adjustment problem," the Hungarian-born US investor told an economic forum in Colombo.
"It has a lot of choices. It can actually transfer to the rest of the world its own problems by devaluing its currency. That is what China is doing."
"The exchange rate is now dropping and it is de-stabilizing the rest of the world. China is now inflicting on the rest of the world these deflationary pressure.
He said deflation was bad as people tended to repay debt.
The current environment reminded him of the 2008 crisis.
"I would say it amounts to a crisis," Soros said. "It is just that we are at the beginning of that. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008."
Soros said he had told his investment managers to be 'very very cautious'.
Many economists and policymakers in the US also has a tendency to blame China for many troubles and try to push up its currency claiming that is manipulating the currency.
China doesn't actually have a reserve currency that other countries peg to.
US attempts to push up China's currency goes back a long way. In 1934 the US bought large volumes of silver to push up China's currency, forcing the country to abandon the silver standard.
China has had loose policy in the past few years and it also upped state spending to boost growth as the US also loosened monetary policy, firing a bubble.
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