The Senate passed a $768 billion defense policy bill that directs the president to create a grand strategy to address global economic and military threats posed by China.
In a new interview taped Monday, billionaire hedge fund titan Ray Dalio said that a military confrontation between the US and China is unlikely for now. He said that if a U.S.-China war happens, it will likely be over Taiwan, a disputed entity about 100 miles off the coast of Southeastern China.
If there is going to be a war issue, it is likely to be around Taiwan, according to Dalio, the editor-in-chief of Yahoo Finance, Andy Serwer. Later on, Dalio said, Watch what's going on closely with Taiwan, and you'll see the straws in the wind. Taiwan has a democratically elected government and a robust unofficial relationship with the U.S. The United Nations doesn't recognize it as an independent country. Since the Chinese Civil War almost three-quarters of a century ago, Taiwan has been in political limbo, as Serwer noted in a column for Yahoo Finance last month. More recently, tensions between the U.S. and China over Taiwan have flared up.
China, for its part, insists that Taiwan is a province of the mainland. In the past year, the country has repeatedly entered Taiwan's air defense zone, and in October, China condemned the U.S. and Canada for trying to stir up trouble by sending warships through the Taiwan Strait.
Dalio described the status of Taiwan and its potential to provoke military action between the US and China this way. It's an important issue that might be fought over, according to Dalio, who spoke to Yahoo Finance. This was the first time Dalio spoke about China's tensions. He's faced backlash over the fact that his hedge fund, Bridgewater Associates, has investments in China - particularly after an interview with CNBC last month, where he likened the country's autocratic government to a stern parent. In a Dec. 5 LinkedIn post clarifying the statement, he said that view was not his own, but rather he was explaining what a Chinese leader told him about the country's approach to governance.
Dalio stated that Bridgewater invests in about 40 countries, including China, and relies on guidance from regulators in those countries and the U.S. He said that Bridgewater is of minuscule importance compared to the rapidly growing risk of U.S. war with China due to misunderstandings and inclinations to fight war, which is far from Dalio's only concern about China. In his new book, Principles for Dealing with the Changing World Order, the hedge fund manager expresses a belief that China will become a greater world power than the U.S., according to a Wall Street Journal review. He made a statement to Yahoo Finance.
Dalio noted that China's population has four times the population of the United States. If it has an average income of half the United States, it will be twice as large as the United States. China may become a greater world power than the U.S. economy has suffered due to the pandemic, the country's regulatory crackdown on Chinese companies and a prolonged property downturn sparked by the downfall of mega-developer Evergrande.
Dalio stressed that the U.S. should focus its attention on itself. If we do the right things, to be strong, so that we are stronger than any opposition in the world, he said, we won't have a problem.