Ray Dalio, the founder of Bridgewater Associates hedge fund, expressed his concerns about the current state of relations between China and the United States. He stated that their relationship is approaching sensitive boundaries but clarified that he doesn’t anticipate a war.
During a discussion at the Greenwich Economic Forum, Dalio highlighted that there are significant and unresolvable differences between the world’s two largest economies. Some of these differences include issues related to Taiwan’s independence, competition over semiconductor chips, and geopolitical tensions.
“The relationship between the U.S. and China is approaching sensitive points in several areas,” he explained to a group of investors, emphasizing that a war between the two nations is not expected.
“Neither country desires a war. Everyone is concerned about the physical and severe economic and political consequences such a war would bring.”
In his final statement, Dalio predicted that “These challenges will likely persist and may even intensify in the coming five to ten years.”
Ray Dalio, who is an advocate for China and an investor, has played a significant role in helping Bridgewater establish a presence in the second-largest economy in the world. The hedge fund has seen strong returns on its investments in China this year, thanks in part to a bond market surge on the mainland, even in the face of challenging economic conditions.
Tensions between the United States and China have been increasing, with concerns surrounding spying accusations, human rights issues, China’s industrial policies, and U.S. restrictions on exporting advanced technologies.
Dalio, a billionaire investor, predicts that the yield on 10-year Treasury bonds could climb to 5%. He believes this is likely due to inflation persisting above the Federal Reserve’s target rate of 2%, with prices increasing by approximately 3.5%. He suggests that interest rates should be 1.5 percentage points above the inflation rate to achieve a balance between supply and demand.
“Yesterday, the yield on 10-year government bonds rose to 4.766%, the highest it’s been since 2007.”
