These days, It takes guts to talk about China, and coverage to tell people publicly to be bullish on China. Ray Dalio, in an interview with Bridgewater's senior portfolio strategist Jim Haskel, shared his thoughts on China, US-China conflict and why investors need to include China in their portfolio.
Dalio started going to China as early as 1984 out of curiosity. He brought one of his sons Matthew with him and enrolled him in a local school in China.
In 80's, China was not what it is today. The $10 electronic calculators Dalio brought to Chinese friends as gifts were considered something miraculous. By then, China's global GDP share was 2% compared with 22% today. Poverty rate was 88% verses less than 1% today.
Dalio points out that the trade war is only a symptom of the inevitable conflict between the incumbent world power, the U.S. and the emerging challenger China. Throughout the history, rising powers and incumbents conflicted or crashed with each other, some ending up in wars, others not.
The question is, why to invest in China and why now, esp. the tension between the U.S. and China has been escalating?
Dalio lists out several reasons why investors should add China to their portfolios.
- MSCI and China's opening up of financial markets
- China's stock market up 4% and bond market, both corporate and government 7%
- China's Central government has a much greater capacity when it comes to monetary policies
- Not investing in China is a bigger risk
Well, here is the interview. We let readers decide whether Dalio makes sense about China.
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