Legendary investor George Soros says China's real-estate crisis is a major threat to Xi Jinping's grip on power

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Legendary investor George Soros says China's real-estate crisis is a major threat to Xi Jinping's grip on power
George Soros is a famed hedge fund manager.Bryan Bedder/Getty Images for Concordia Summit
  • George Soros has said China's real-estate crisis poses a threat to Xi Jinping's grip on the presidency.
  • The hedge fund titan said problems at developer Evergrande are a major danger for the country's economy.
  • Soros harshly criticized Xi's leadership, saying he wants total control and to stamp out individual freedoms.
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Hedge fund titan George Soros has said China's real estate crisis poses a major threat to President Xi Jinping's grip on power, in a highly critical speech on Monday.

"China is facing an economic crisis centered on the real estate market, which has been the main engine of growth since Xi Jinping came to power in 2013," Soros said at Stanford University's Hoover Institute.

The 91-year-old said the crisis – centered on the imploding real estate developer Evergrande – "will turn many of those who invested the bulk of their savings in real estate against Xi Jinping."

China has been grappling with a real estate crisis since imposing strict debt limits on developers in 2020 in an effort to cool the red-hot sector. The sector makes up around 30% of the country's gross domestic product, according to economists.

Evergrande is one of the country's biggest developers and has more than $300 billion in debts. It officially defaulted on offshore bonds in December, and analysts fear a disorderly collapse could knock the Chinese and global economies.

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Soros said the Chinese government may have postponed dealing with Evergrande for too long. The government is focusing on ensuring apartments and built and delivered, but international lenders to the company have complained that they've been left in the dark about any restructuring efforts.

"Xi Jinping has many tools available to reestablish confidence – the question is whether he will use them properly. In my opinion, the second quarter of 2022 will show whether he has succeeded. The current situation doesn't look promising for Xi."

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Soros also said China faces a serious demographic problem, with a falling birth rate set to aggravate the real estate crisis, produce labor shortages and slow down the economy. He also said China's strict zero-Covid policy would weigh on the economy in the short term.

He savaged Xi's leadership, saying he's trying to impose total control on China and crush personal liberty. Soros, who founded the hedge fund Soros Fund Management in 1970, has long campaigned against leaders he sees as authoritarian.

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China said in 2019 that Soros' criticisms of Xi are meaningless and shortsighted, and that the famous investor should try to hold a more "objective, rational and correct opinion of China's development", according to Reuters.

Big-name investors have found themselves increasingly divided on the question of China, an increasingly important player in financial markets. Ray Dalio, founder of the Bridgewater hedge fund, has drawn criticism for defending China's system and praising its economy.

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