Ray Dalio Says China’s Winning Trade War With US, But a Clash Is Avoidable

(Bloomberg) — Ray Dalio, the founder of hedge fund Bridgewater Associates, said China is coming out on top in the trade war with the US, though the standoff between the world’s two biggest economies likely won’t escalate into military conflict.

Most Read from Bloomberg

The billionaire investor told a conference in Dubai on Wednesday that the renminbi was beginning to be used more widely for international trade and the real winners of the confrontation will be those able to tap into both the US and China.

“China’s winning the trade war if you just take the numbers – the percentage of world trade and dominance,” Dalio said.

Washington and Beijing have clashed on issues including human rights, trade and competition for technology and markets. Relations have hit a new low point with the shooting down of an alleged Chinese spy balloon over US territory.

The Biden administration is also pressing ahead with plans to curb China’s access to sensitive semiconductor technology and is trying to get countries it considers allies to do the same. It’s also working to lessen US reliance on China for merchandise.

Dalio, who warned late last year that the countries were “dangerously close to a military war,” said the US still appeared to be “on the brink” of conflict with China.

“Brink doesn’t mean we’ll go over the brink,” he said. “Hopefully we don’t go over the brink,” he said.

But for Dalio, the far greater challenge to America is from within.

“A deterioration of infrastructure, education, political conflict, leadership,” alongside the opioid crisis and a growing divide between the poor and the rich, are among symptoms of decline, he said.

“The primary threat is internal,” Dalio said. “Basically, be strong. If you’re strong and healthy, you’ll be domestically and internationally well-off.”

–With assistance from Anthony Di Paola and Ben Bartenstein.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.