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China "on a Treadmill to Hell"



(p. B1) DAVOS, Switzerland -- At the World Economic Forum here, chief executives and investors are blaming China for a slump in global markets.

Fears about the country's downshift, as its official growth slowed to a quarter-century low, have dominated high-level discussions, both during public debates and in smaller, private meetings.

The financier George Soros said at a dinner on Wednesday night [January 20, 2016] that a "hard landing is practically unavoidable," adding that China is the root of the current financial crisis.


. . .


(p. B6) Kenneth Rogoff, a Harvard economist who has long warned of a potential financial crisis in China, remained skeptical [that the Chinese government will reform its policies]. "There is a big propaganda push to say everything is good, everything is fine."

Earlier in the week he told attendees at the forum that China's large accumulation of government debt would one day be a shock to a financial system that "amplifies shocks."

Others with bearish views on China have kept their claws out. Jim S. Chanos, who once said China was "on a treadmill to hell," said he remained deeply concerned. His hedge fund, Kynikos Associates, estimated that China's nominal gross domestic growth in 2015 was 5 percent compared with 15 percent just five years earlier.

"China's debt problems still lie ahead of it," Mr. Chanos said on Thursday, referring to concerns about the extent to which China's seeming economic growth is actually fueled by borrowing.

As for Mr. Soros, he told an audience at the Panorama Restaurant in the Seehof Hotel in Davos this year that the Chinese had waited too long to properly address the transition of its growth model. Asked by a Bloomberg reporter if there was a risk of repeating 2008, Mr. Soros said the market was in a similar time of financial crisis.

"But the source of the disequilibrium is different," Mr. Soros said, adding that in 2008, the main cause was the United States subprime crisis. "Now," he said, "the root cause is basically China."



For the full story, see:

ALEXANDRA STEVENSON. "Fears About China's Economy Fester at Davos." The New York Times (Sat., JAN. 23, 2016): B1 & B6.

(Note: ellipsis, and bracketed date and phrase, added.)

(Note: the online version of the story has the date JAN. 22, 2016.)






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