Read George Soros On Why China Is The World's Biggest Story Right Now

Everything seems to be going fine in the world economy, and people are scratching their heads wondering how it could turn south again.

In a new piece up at Project Syndicate, George Soros says to watch China:

There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.

Aware of the dangers, the People's Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.

So China could have a meltdown like the US in 2008 or it could drive the entire global economy to new heights.

The ultimate conclusion to China's tension - whether it can successfully rebalance its economy away from debt - will have "profound" consequences for the whole world he says.

Read Soros' whole column here >