THE world could be headed towards a new global financial crisis similar to that which decimated markets in 2008, says billionaire investor George Soros.

Speaking at an economic forum in Sri Lanka Thursday, the 85-year-old drew similarities between the current economic environment and the financial crash of 2008.

“When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008,” he said.

“Unfortunately China has a major adjustment problem and it has a lot of choices and it can actually transfer to the rest of the world its own problems by devaluing its currency and that is what China is doing,” Soros said of the world’s second largest economy.

His speech came as world markets tumbled and oil prices reached new lows after China suspended its stock market when shares fell more than seven per cent for the second time this week.

“We are facing a very serious transitional problem which is quite recent and it is, I would say, (a situation) that amounts to a crisis, and we are at the beginning of that,” Soros said.

In the event which was attended by Sri Lankan President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe, Soros said a weaker Chinese yuan was “inflicting deflationary pressures” on the rest of the world.

“I agree with Soros to the extent that China’s economy is creating a ripple effect throughout the global economy,” said Paul Mazzola. “But I’m not as pessimistic as him to think it will cause another global financial crisis.”

Speaking to news.com.au the former banker and associate head of the School of Finance at Wollongong University said he shared Soros’ belief that the artificial value of the yuan was “the source of the world’s global instability” but stopped short of saying it was time to panic.

Let’s get China right and it will go a long way to fixing global markets, he said.

Photo - Hungarian-born US magnate and philanthropist George Soros attends an economic forum in Colombo on January 7, 2016. AFP/lakruwan wanniarachch i.Source:AFP

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