Ray Dalio, the billionaire hedge fund manager, warned that China is beating the US in their trade war and expressed fears the two superpowers are “on the brink” of military conflict.
The founder of Bridgewater Associates, which has an estimated $140 billion in assets under management, recently told a conference in Dubai that the Chinese currency, the renminbi, is being more widely used in international trade.
“China’s winning the trade war if you just take the numbers – the percentage of world trade and dominance,” Dalio said.
Dalio’s comments, first reported by Bloomberg News, came amid the backdrop of heightened tensions between two of the world’s largest economies following last week’s shooting down of a suspected Chinese spy balloon after it hovered over American airspace.
Dalio said that the US was “on the brink” of military conflict with China, though he expressed optimism that a full-blown confrontation would be avoided.
“Brink doesn’t mean we’ll go over the brink,” he said. “Hopefully we don’t go over the brink.”
The balloon incident prompted Secretary of State Antony Blinken to cancel a planned trip to Beijing for high-level discussions with Chinese officials.
China has also been engaged in saber-rattling against longtime US ally Taiwan, the breakaway republic which Beijing views as part of its territory.
Aside from the balloon incident, the US and China have struggled to navigate a fraught economic relationship.
Washington has long accused Beijing of intellectual property theft and unfair business practices that violate international trade rules.
Overall US imports from China remain well below the pre-trade war trend, per an analysis by the Peterson Institute for International Economics.
Rhodium Group data shows American direct investment has been cooling for years, hitting a low of $8.7 billion in 2020, down from a peak of $21 billion in 2008.
Dalio said the major challenges facing the US are from within, including “a deterioration of infrastructure, education, political conflict, leadership.”
He also cited the opioid crisis and income inequality as further signs of internal decay.
“The primary threat is internal,” Dalio said.
“Basically, be strong. If you’re strong and healthy, you’ll be domestically and internationally well-off.”
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