The head of China’s sovereign wealth fund, speaking on the same panel, said today those policies make him a “little bit worried” about the dollar.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, has dropped 4.6 percent in the past six months and about 8 percent since the end of November 2008, the month the Fed began quantitative easing. The gauge is weighted 57.6 percent to movements in the euro.
“The printing machine will have to slow down considerably in order for people to have confidence in the dollar,” Jin Liqun, chairman of China Investment Corp., said on the panel, which was moderated by Bloomberg Television’s Francine Lacqua. “I have confidence in the resilience of the U.S. economy,” he said, adding the U.S. can probably achieve 2 percent growth.
Beijing-based CIC was set up to improve returns on the world’s largest foreign-currency reserves by investing overseas. China has $3.3 trillion of reserves, according to data compiled by Bloomberg.
Productivity Key
China’s manufacturing is expanding at the fastest rate in two years, a report showed yesterday, bolstering prospects that economic growth will accelerate for a second straight quarter. The data suggest that China’s expansion at the start of 2013 will equal or exceed its 7.9 percent clip in the fourth quarter.
Dalio said China is in a different part of the economic cycle than the U.S., and Europe will have to contend with social and political pressures this year. Debate about what drives economic growth should focus on how countries can raise productivity, he said.
“The fundamental law is we can’t raise debt faster than income from now on,” he said. “The discussion now is going to be about competition and there are clear benchmarks for competition. Productivity is going to be the question.”