Bloomberg News
October 15, 2012
Billionaire investor George Soros
said China’s growth is slowing because household spending as a
percentage of the world’s second largest economy is waning.
“The growth model which has worked is running out of steam
because consumption as a percentage of GDP has fallen” to one-
third of output from half, Soros said at a National Association
for Business Economics conference in New York today. Central
bankers “will have to modify the growth model and somehow allow
the household sector to have a bigger share of the total.”
China’s economy expanded 7.6 percent in the second quarter
from a year earlier, the least in three years. The IMF this
month cut its estimate for China’s 2012 growth to 7.8 percent,
which would be the weakest pace since 1999, from 8 percent.
Soros said the unprecedented actions global central banks
have taken to stimulate growth are necessary to “prevent a
depression,” yet the “big open question” is whether they can
exit the stimulus programs when the economy rebounds without
spurring inflation. The programs include three rounds of so-
called quantitative easing by the Federal Reserve and the
European Central Bank holding its main rate at a record low 0.75
percent.
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