Unfortunately the war with China is spreading. Yesterday it spread to a currency war that will affect all currencies. It could spread to a capital war and/or an embargo war (shutting off needed items). In a worst case, it could go beyond that. We need to watch it closely. If there’s no big war, I’m bullish on China and if there’s a big war, I’m bearish on both the U.S. and China. If you want to know my thinking about China and investing in it, you can hear my Bridgewater Associates interview on these subjects here. More broadly I’d like to repeat that I believe that there are three big forces to watch: 1) the end of the short- and long-term debt cycles when there is an economic downturn and monetary policy cannot ease because interest rates can’t be cut and central bank financial asset buying (QE) is no longer effective, 2) internal conflicts between the haves and have nots that become extreme, and 3) external conflicts between a rising power (China) that challenges an existing world power (the U.S.). The late 1930s was the last time we saw the confluences of these forces. If you’re interested in a more in-depth look at these forces see my research pieces and/or watch my 30 minute animated video “How the Economic Machine Works” at economicprinciples.org
With China continuously in the news, it brings to the forefront one of the central issues of our time, a rising power challenging an existing power. Our founder, co-CIO and co-chairman, Ray Dalio – who has been visiting and studying China for 30+ years – recently sat down with senior portfolio strategist Jim Haskel to explore the ever evolving US-China dynamic and what it means for investors now and in the future. https://lnkd.in/gGAfzwp
Bridgewater’s Ray Dalio Discusses the Impact of China’s Growth on the World Economy
https://www.youtube.com/
Joe Pineda
4y
Ray Dalio gives us an informed outlook on the future of China and world economy. Two important take aways for me: 1) China will become the world’s largest economy in the next 5 to 15 years. This is going to change how the financial world works. 2) The historical context of the past 500 years shows over and over that when there’s a rising power challenging an existing power there is going to be conflict. There’s been 16 occurrences during the last 5 centuries, 12 of those occurrences have led to war. The empire who wins the war gets to set what the world order is. Ray Dalio Seems to be bullish on China, with a few caveats. Fascinating stuff. Worth watching.
Ray Franzi
4y
Thank you Ray for sharing as always. I am a bit worried by the negative impact of demographics and social unrest which could be powerful against a long term bullish view.
Manu Wope
4y
Ray Dalio's take at the ever evolving dynamics of the US-China relationship. A young stallion challenging the reigning bull. In the absence of war bullish on China. If war bear on both China and the US... In summary it's a very risky world out there and it'll be unwise to ignore China in asset allocation/diversification
Ray what would you say to someone who owned a fund that in amongst all this trade war turmoil , slow down in earnings , yield curve inversion and after a 20% run in the stock market YTD ,this fund decided to go long equities , short bonds 100% and short the yen in June ? Also on top of that this fund had delivered less than 20% cumulatively over the last 7 years .....
Thank you very much for this letters and videos. I really appreciate them. So sorry to comment on this, as is out of the main debate and feeling bad for daring to correct you, but regarding empires, there´s no such thing as a Dutch Empire. During the sixteenth century and for more tan 200 years, the biggest empire ever in the world was the Spanish Empire, to which what is known today as The Netherlands, belonged. Best regards, and would love to further discuss. Luis
Alex Chan
4y
This is a very insightful video. Thanks!
Joe Zhou
4y
Have you read Mr. Michael Pettis' articles about China? How do you think about his conclusion "China's definition of GDP is very different from most of the world?" And would you think that will cause any issue to your judgment? Thanks.
Bryan Wang
4y
I am a Chinese, born and raised. You know what came to my mind first? I wouldn't argue with people who look down upon us. Let them imaging China whatever they want, I can feel the changes indeed, how did my grandparents and parents live their lives, and how do I live my life. It is not has been decided yet, which system is better. As far as I can see, our government is helping us to build a life we want. I am patient to see that happens. BTW, I appreciate you spread the word to the world. But, I haven't bought enough stocks yet.
Principal Optical Engineer
3yInvesting in China can be very risky during US-China conflict escalation period. Even CCP billionaires end up in jail during more or less smooth time, big foreign investors should stay away from China in next few years.