The future direction of China is the
"major" source of uncertainty facing the global economy at the
moment, according to billionaire investor George Soros.
The major uncertainty facing the world today is not
the euro but the future direction of China. The growth model responsible for
its rapid rise has run out of steam," Soros, chairman of the Soros Fund
Management, wrote in an opinion piece on the Project Syndicate website on
Thursday.
Soros says there are "unresolved
contradictions" in the leadership's current policies, which would have
profound consequences for China and the world if they are not addressed.
"The Chinese leadership was right to give
precedence to economic growth over structural reforms, because structural
reforms, when combined with fiscal austerity, push economies into a
deflationary tailspin," he said.
"But there is an unresolved self-contradiction
in China's current policies: restarting the furnaces also reignites exponential
debt growth, which cannot be sustained for much longer than a couple of
years," he said.
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