The world’s two largest economies are on the edge of war, and the situation will worsen as the US heads into the presidential election in 2024, according to Ray Dalio, founder of Bridgewater Associates.
“The hawkish political influences in the United States will exert more pressure on the relationship over the next 18 months because of the emergence of the 2024 election season,” Dalio, who has traveled to China twice recently, wrote in a LinkedIn post Wednesday. “That will be a very risky period because China and the US are now already on the brink of war.”
While a war isn’t inevitable, many “red lines” will be pushed up against with “brinksmanship,” including issues on Taiwan, Beijing’s dealing with Moscow, and the US’s move to cut off China’s access to essential semiconductors, he wrote.
“Each one is risky, and together they carry a lot of risk,” he said.
Taiwan, which China views as its territory and a top national security priority, will hold its own presidential election in January 2024 — 10 months before the US one.
“Both sides have been very clear that they recognize that either an economic decoupling or a military confrontation would be disastrous, while they are testing each other’s limits,” he said.
Dalio, 73, built one of the world’s biggest hedge funds through focusing on economic trends such as inflation, interest rates and foreign-exchange rates before giving up control of Bridgewater last year.
This article was provided by Bloomberg News.