What country will benefit most from the fallout of the financial crisis?
China, says hedge fund king George Soros.
“I think that China is the great winner of the whole situation,” he says.
“Right now, it's overheating. And they are moving to cut back.”
China has recently announced several steps to tighten monetary and fiscal policy, including an interest rate hike.
“They have inflation,” Soros told CNBC.
“And they are now actively increasing capital reserve requirements. Until they finish the job, I think the markets are likely to be under pressure.”
But ultimately, China will succeed, Soros says.
And then, “I think China will remain a very attractive area for investments.”
China has drawn strong criticism from the U.S. for refusing to let its currency rise much.
“It would be in China's own interest now to allow the renminbi to appreciate,” Soros said.
“And, of course, it would be of great benefit to the rest of the world.”
And because China depends on the rest of the world for its exports, a stronger renminbi would help China too.
“So it really now cries out as the most efficient way of bringing inflation under control,” Soros said.
Economist Andy Xie agrees with Soros that China’s policy tightening will cool the economy’s bubbles, particularly in real estate.
“We’re seeing some significant measures that have been introduced,” Xie told Bloomberg.
“If these changes are implemented, the demand from third-flat buyers is going to dry up.”
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