2024-03-29 02:45:07
Ray Dalio, founder of hedge fund Bridgewater Associates, urged China on Wednesday to reduce its debt burden or risk experiencing a lost decade similar to Japan’s economic stagnation in the 1990s.
Updated March 29, 2024 10:30 CST
China is facing a “once-in-a-century storm” and urgently needs to resolve its debt problem, otherwise it may experience a lost decade similar to Japan’s economic stagnation in the 1990s.
That’s the view of Ray Dalio, the billionaire investor and founder of hedge fund Bridgewater Associates, in a LinkedIn blog post on Wednesday, urging Chinese leader Xi Jinping to mitigate China’s Debt burden, while relaxing monetary policy to guide the Chinese economy through the difficulties.
“In my opinion, this should have been done two years ago. If not done, it might have caused China to experience a lost decade,” Dalio wrote.
Dalio believes that China should now focus on mitigating imbalances, including the following aspects:
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China is facing a “once-in-a-century storm” and urgently needs to resolve its debt problem, otherwise it may experience a lost decade similar to Japan’s economic stagnation in the 1990s.
That’s the view of Ray Dalio, the billionaire investor and founder of hedge fund Bridgewater Associates, in a LinkedIn blog post on Wednesday, urging Chinese leader Xi Jinping to mitigate China’s Debt burden, while relaxing monetary policy to guide the Chinese economy through the difficulties.
“In my opinion, this should have been done two years ago. If not done, it might have caused China to experience a lost decade,” Dalio wrote.
Dalio believes that China should now focus on mitigating imbalances, including the following aspects:
The average retirement age in China is 53 years old, and the average age of death is 84 years old. “On average, people without income have to be managed for 31 years.” China’s previous one-child policy also meant that one person had to take care of two elderly parents. China’s elderly care services need to be improved and the retirement age needs to be raised. China should clearly plan how to deal with conflicts related to the gap between rich and poor and values. The conflict between China and the United States is having a huge negative impact, which increases the probability of a devastating war in the next decade. Climate is a big issue and a threat. Winning the technological war means winning the economic war, geopolitical war and military war.
Dalio said that while capitalism creates a cycle of credit and spending power that unleashes creativity and promotes periods of prosperity, it often also creates wealth gaps and massive debt.
“When the debt becomes too large to be repaid and there is a huge gap between rich and poor, it will lead to a reversal of the cycle,” he said.
In China, debt pressure combined with major power conflict, major technological changes, and droughts, floods, and epidemics have created the conditions for this once-in-a-century storm to make landfall.
Dalio said it’s also important to “distinguish between the cards Xi Jinping holds and the way he chooses to play them.”
As of Wednesday, Hong Kong’s Hang Seng Index was down 3.8% year to date, but down 16% from a year ago. The S&P 500 is up 10% this year and closed at a record high on Wednesday.
(This article is translated from MarketWatch. MarketWatch is operated by Dow Jones, the parent company of The Wall Street Journal, but MarketWatch is independent from Dow Jones Newswires and The Wall Street Journal.)
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