Bridgewater Founder Ray Dalio: U.S., China Are on the Brink of WarReshma Kapadia
The founder of hedge fund Bridgwater Associatiates says the countries are close to passing a point that would "push them over the brink into some type of war."
Billionaire Ray Dalio just spent 13 days in China and has advice for the world’s 2 great powers ‘on the brink of going to war with each other’
Prarthana Prakash
The veteran investor and founder of hedge fund Bridgewater Associates has had close ties with China through investments at his firm. Following a recent 13-day trip to the country, Dalio wrote a LinkedIn post Tuesday reflecting on the state of Sino-American relations.
“For nearly 40 years, I have been going to China,” Dalio wrote. “That has put me in the privileged and awkward position of being deeply attached to the two greatest powers in the world, which are on the brink of going to war with each other.”
Dalio’s Bridgewater has been a big investor in China, with $2.93 billion in holdings there as of January. Its Chinese onshore fund debuted in 2018 and is now the largest foreign hedge fund in the country.
Here’s what he expects in the U.S.-China relations in the coming months.
Pushing the limits of brinkmanship
The U.S. and China are nearing war because of one main problem: communication, Dalio said. The two countries are using sanctions and their militaries to ultimately push the other to cross the “red line” of launching an actual war.
Surprisingly, Dalio recommended against more talk between the two countries. As it is, the more they talk, the more they squabble.
“Discussions about big, important things have become exchanges of accusations that worsen relations rather than help them, so it is worse to have the discussions than to avoid them,” Dalio wrote.
If the U.S. and China continue to instigate one another, it will “irrevocably push them over the brink into some type of war” and hurt the world order, he added.
"U.S.-China relations are getting so bad that there is reason to worry that anti-China sentiment could make doing business with China like doing business with Russia, which would lead U.S.-China trade to collapse,” Dalio wrote.
“All things considered, I think that the greater provocations will most likely come from the American side, which I worry will cause a tit-for-tat crossing of the line,” Dalio said.
In Dalio’s view, leaders in China and in other countries believe America’s domestic problems have tarnished its global image. Other countries no longer aspire to be like the U.S., and foreigners no longer necessarily dream of living there. This is creating global disorder, Dalio thinks. People now view the U.S. as trying to impose its ideas about democracy and capitalism worldwide, he said.
“Some countries believe that while the Americans are trying to draw them into war (especially the Russia-Ukraine war), the Chinese are trying to facilitate peace,” Dalio wrote.
And amid the decline of U.S. global dominance, the world still needs a strong guiding force—and China could be it, except many countries don’t want to pick sides, according to Dalio.
“The fight for global influence is well underway, and great splits between different countries’ leaders and even different political parties within countries exist, so while alliances are emerging, relationships are pretty unstable and fragmented,” Dalio wrote.
Even European countries like France have opposed China on some business and international-relations-related topics, but were careful not to be too anti-China or pro-Taiwan in their stance.
Furthermore, Dalio said that some countries no longer need to pick sides because they have taken matters like defense into their own hands. For example, Dalio noted that nine countries already have nuclear weapons and another 75 could develop those weapons, and they are therefore less in need of superpower allies.
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