According to billionaire George Soros, China is in the midst of an economic crisis following a real estate bubble that stopped abruptly last year.
President Xi Jinping may not be able to restore trust in the struggling sector, which has been rocked by a string of developer defaults and declining land and apartment prices, the billionaire warned in a lecture at Stanford University's Hoover Institution on Monday.
Soros warns against investing in China
According to Soros, China's real estate bubble was built on an "unsustainable" paradigm that rewarded local governments and encouraged individuals to put their money into property. Government regulations intended to cool the market made it harder for Evergrande, a heavily leveraged real estate colossus, to repay its loans, he noted.
The developer is saddled with more than $300 billion in total obligations, including $19 billion in offshore bonds held on behalf of customers by international asset managers and private banks. Evergrande has been fighting for funds to repay lenders for months, as per CNN.
Per NDTV, government officials have been dispatched to the corporation to oversee a reorganization, but nothing is known about what will happen next. Evergrande has requested additional time, but some lenders do not seem ready to wait. The firm said on Sunday that receivers had been appointed over a Hong Kong block of property that it had pledged as security against a $520 million loan last year.
Furthermore, in September, George Soros, the famed investor and head of the Open Society Foundations, claimed that the asset management BlackRock was making a "tragic mistake" by expanding its operations in China.
He has chastised Beijing for its surveillance measures and anti-business policies. Analysts have expressed fear that Evergrande's failure might cause larger problems in China's real estate market, harming homeowners and the financial system as a whole. Real estate and allied sectors contribute up to 30% of the country's gross domestic product.
Last year, China's GDP grew by 8.1%, but slowing growth in the last months of 2021 shows the real estate crisis, fresh COVID outbreaks, and Beijing's stringent approach to virus control are taking a toll.
George Soros pumps $125 million into super-PAC
Meanwhile, this election season, Soros is donating $125 million to a super PAC to support Democratic candidates and causes in the midterms and beyond. The 91-year-old, who built his wealth in hedge firms, has been supporting political campaigns through the Democracy PAC since 2019, funneling $80 million through it throughout the 2020 election season.
The midterm elections this year, which will determine who controls the House and Senate for the rest of President Joe Biden's term, are projected to set new expenditure records. Super PACs are mostly to blame for the growth.
They can raise as much money as they want from corporations, unions, and people to spend on campaigning for or against politicians. Super PACs, unlike ordinary political action committees, are not authorized to give directly to lawmakers or collaborate with their campaigns.
Alex Soros, George Soros's son, will lead the PAC. The money makes Soros one of the most prominent contributors in this election year, which is sure to enrage conservatives, as per Daily Mail. The Hungarian-born financier has long been invoked as a symbol of aristocratic liberalism. Conspiracy theories linking him to a Jewish web of influence have spread from the darkest corners of the internet to right-wing news outlets.
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