Soros Warns China Credit Cycle Has Gone “Parabolic” Just To Keep Zombies Alive

After warning last year of a “practically unavoidable” hard-landing to come in China, George Soros unleashed his central-planner-crushing self last night on the great red ponzi. As we noted last night, Soros warned the “parabolic” rise in credit  is very worrisome, and “eerily reminiscent of US in 2007-8,” specifically adding that“most of the money that banks are supplying is needed to keep bad debts and loss-making enterprises alive.” Soros’ full discussion can be found below…

“Most of the damage occurred in later years,” he said according to Bloomberg, referring to the spurt in US growth before the crash.

Simply put – as we highlighted with the shenanigans in the steel industry – China is attempting reflate its economy once again by reviving zombies who have now died twice. This can only end badly, and Soros was not alone in his opinions…

“Whether we call it stabilization or not, I am not sure,” Andrew Colquhoun, the head of Asia Pacific sovereigns at Fitch Ratings said in an interview in New York. “From a credit perspective, we’d be more comfortable with China slowing more than it is. We are getting less confident in the government’s commitment to structural reforms.”

 

The stabilizing trend isn’t giving investors “enough confidence,” as China seems to have relied more on government investment in state-owned enterprises to boost the economy, said Gao Xiqing, former vice chairman of the China Securities Regulatory Commission, in an interview in New York this week.

George Soros’ full discusssion can be viewed below (he begins at around 27:00 mark)…

HaTTiP