Ray Dalio on China

Four-Decade Perspective

Dalio visiting China in the 80s. Source: Dalio and Bridgewater.

Ray Dalio has been visiting China since 1984, originally out of curiosity, only starting investing in China over the last decade. Takeaways from his interview yesterday:

UNDENIABLE WORLD POWER. China went from 2% of world GDP in 1984, to 22% in 2018. China is now a world power just like the U.S. and Europe.

RESERVE CURRENCY HISTORY. Dalio has studied economic history of the last 500–1000 years. Whenever there’s a rising economic power, conflict always arises between the rising power and existing power.

Reserve currencies and their reigns
Average of the four reserve currencies from above

Each reserve currency reign happened because of some technology that allowed the nation to have a competitive advantage. E.g. the Dutch in the 1600s triumphed because of their ships, which were able to circumnavigate the earth and bring back goods, increasing their share of world trade to 50%. They developed military to protect their trade routes, and enabled banking to facilitate trade within their empire.

TECH CATCHING UP QUICKLY. In terms of how to invest in China, Dalio didn’t favor any particular asset classes. He did marvel at the speed at which technology has progressed in China:

China catching up quickly in Venture Capital investments
China accounts for a third of global unicorns by count, but 43% by value
Bridgewater projections.

Venture Partner @ FusionFund.com; EIR @ SU.org/ventures; enthusiastic techie; incorrigible do-gooder; epistemic forager

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