Soros Says China’s Real Estate Crisis, Omicron Threaten Xi’s Rule
- Billionaire says Xi faces opposition within Communist Party
- Comments delivered days before start of Olympics in Beijing
Billionaire philanthropist George Soros said China’s Xi Jinping may fail to extend his rule of the country later this year, as is widely expected.
“Given the strong opposition within the Communist Party, Xi Jinping’s carefully choreographed elevation to the level of Mao Zedong and Deng Xiaoping may never occur,” Soros, 91, said in remarks prepared for delivery Monday at an event sponsored by the Hoover Institution at Stanford University.
Soros, speaking days before the start of the Winter Olympics in Beijing, cited Xi’s enemies within the party, a real estate crisis, ineffective vaccines and a falling birthrate as factors working against him.
Xi, 68, has positioned himself to secure a precedent-breaking third term as president and general secretary when the Communist Party holds a twice-a-decade Party Congress toward the end of 2022. Just three months ago, senior party officials declared that China had reached a “new historical starting point” under Xi’s leadership, setting the stage for a process that could elevate him to the level of Mao and Deng – allowing him to run the country indefinitely.
The lead-up to the congress is one of the most sensitive periods in China’s political calendar, with much of the jockeying for positions taking place behind closed doors in the country’s opaque one-party system. On the surface, however, Xi has appeared to consolidate power and sideline potential challengers, leading most China watchers to conclude that he’ll easily extend his rule.
Soros, however, sees a fight brewing over Xi’s management of the economy and the pandemic that could see him ousted from power. The billionaire is the founder of the Open Society Foundations, the second-largest private charitable foundation in the U.S. with assets of about $28 billion, which works to build democracies around the globe and oppose authoritarianism.
Internal divisions in China are “so sharp that it has found expression in various party publications,” Soros said. “Xi is under attack from those who are inspired by Deng Xiaoping’s ideas and want to see a greater role for private enterprise.”
China has long dismissed Soros’s criticism. In 2019, when he called Xi the world’s “most dangerous opponent of open societies,” the Foreign Ministry in Beijing said the remarks were “meaningless and not worth refuting.”
Under Xi, Chinese regulators have reined in some of the nation’s most successful technology companies, including curbing their listings on U.S. exchanges. The government also took aim at the nation’s $100 billion for-profit education sector, part of Xi’s wider “common prosperity” campaign to rein in the billionaire class and improve the lives of ordinary citizens.
The troubled real estate market, the country’s main engine of growth since Xi became president in 2013, could also derail the Chinese leader, Soros said.
The current model is “unsustainable,” he said, with buyers, using borrowed money, forced to start paying for their apartments before they were even built. Local governments derived most of their revenue from selling land at ever-rising prices, which were 30% higher in June from a year earlier, Soros said.
With housing increasingly unaffordable for most people, prices for both land and apartments are starting to fall. China Evergrande Group, the world’s most indebted developer, was labeled a defaulter for the first time in December after it missed payments on several bonds, and many of its competitors are struggling. Citizens who invested the bulk of their savings in real estate will turn against Xi, Soros predicted.
Chinese officials have downplayed the potential fallout from the housing market troubles, with central bank Governor Yi Gang repeatedly saying the government would contain risks posed to the economy by the liquidity crisis at developers like Evergrande.
The question now is whether Xi will use the necessary tools to re-establish confidence, Soros said.
“The second quarter of 2022 will show whether he has succeeded,” he said. “The current situation doesn’t look promising for Xi.”
The rise of the Covid-19 omicron variant will also pose a serious danger to the economy and Xi’s ability to control the spread of the disease, Soros said. He claimed that the variant “is no longer under control” and Xi’s strategy of strict lockdowns risked spurring a backlash among the population.
“Omicron threatens to be Xi Jinping’s undoing,” Soros said. He added that he hopes Xi is replaced by a leader who’s less repressive at home and more peaceful abroad.
“This would remove the greatest threat that open societies face today,” Soros said. “And they should do everything within their power to encourage China to move in the desired direction.”
Author: Katherine Burton, Bloomberg