Caixin has an exclusive interview with George Soros during a recent trip to Hong Kong:
Caixin: Do you think there are asset bubbles in China?
Soros: People see bubbles everywhere. Again, there is no question the financial stimulus has pushed up asset prices. Whether that is a bubble or not actually depends on whether it’s going to be a hard landing or a soft landing. If it is a soft landing, then it is not a bubble. If it is hard landing, it will be a bubble. We’ll only know if it’s a bubble or not later.
Caixin: Do you think Chinese government actions will create a hard or soft landing?
Soros: It’s a big question, because the first effect of restricting credit is the increase in the demand for credit, because everybody wants to rush, to get whatever credit is available. So it may take time before these measures actually slow down economic growth. And the longer it takes, the bigger the chance that it will turn into a hard landing. Because if the economy continues growing at this excessive rate until next year, you could have a significant increase in supply coincide with a decline in demand, and then you would have a hard landing. And that is why I think the government is vigilant in pushing hard to restrict credit.
Caixin: What is your attitude toward China now? Positive or negative?
Soros: I’m very cautious, until the economy cools off a little. When it does, I will be more optimistic again.
