George Soros, the world-famous financier and currency speculator, said on Sunday he believes China’s global economic influence is set to increase at a faster pace than most people expect. Citing China’s extensive capital control of its banking sector, Soros told an audience at Fudan University in Shanghai, that as a result of the country’s isolation from the global financial system, China was able to shield its financial institutions from the worst global economic crisis. Mr. Soros also expressed confidence in China being the first country to recover from the global contraction.
From Reuters: “In many ways, Chinese banking has benefited from being isolated from the rest of the world and is in better shape than the international banking system,” [Soros said.]
In his speech Mr. Soros noted China’s economy was badly hurt by the anomalies of international trade but that the world’s third-largest economy fought back with the implementation of its aggressive 4 trillion yuan ($586 billion) economic stimulus program and plans to extend domestic spending and overseas investment.
“China is going to be a positive force in the world and the market, and as a consequence, its power and influence are likely to grow. Personally, I believe it’s going to grow faster than most people currently expect,” Soros said.
When asked if the recent surge in global stock markets was a bear market rally, he said:
“It may have further to go because there is a lot of liquidity, a lot of investors are on the sidelines. If the market keeps on going up, more of them may decide to join in. You never know how far the rally goes.”
“But I certainly don’t think we are at the beginning of a big bull market worldwide.”
Soros, who made his fortune by several currency-speculation bids, supports reflexivity, a theory rejecting the idea that the market is fundamentally self-correcting.