Insider Monkey

Ray Dalio’s China Stocks

Hamna Asim
20 min read

In This Article:

In this article, we discuss Ray Dalio’s China stocks. If you want to skip our detailed discussion on Dalio’s stance on China over the years, head directly to Ray Dalio's Top 5 China Stocks. 

Ray Dalio’s Bridgewater Associates established its presence in Shanghai's Free-Trade Zone in 2016. Simultaneously, notable American hedge funds, including Jim Chanos’ Kynikos Associates and Kyle Bass’ Hayman Capital Management, opened short positions on Chinese equities. These investors believed that the Chinese economy was at risk of a financial crisis due to the increasing levels of corporate and public-sector debt. Hubert Tse, a partner with Shanghai-based law firm Boss & Young, explained the situation: 

“When China decided to open domestic markets to foreign asset management companies by allowing them to set up wholly foreign-owned enterprises, they wanted in many ways to first attract the biggest and best in each class. By attracting Bridgewater, which is the largest in the hedge fund world, China felt it would help China attract the best hedge funds from around the world. China also felt that it will only help further open up the market by allowing the biggest and best to come in first. There is no point in allowing in the small ones to come in first.”

“China is having a heart transplant”

In 2016, Ray Dalio, like the rest of the world, tried to make sense of the Chinese economy, and concluded that China was undergoing a remarkable economic shift, transitioning from an investment-focused economy to a consumption-based economy. However, this transition presented challenges due to the accumulation of debt and saturation in sectors that previously supported the economy, such as industrials and property, during the investment phase. Dalio commented: 

"China is having a heart transplant. You're probably going to be fine in the long run, but it's going to weaken you, and it's got to be well executed ... You will get through it, and you will be better than before. I think that's what the situation is."

Don't Miss: Billionaire Bridgewater Founder Ray Dalio’s Top 10 Holdings in 2023

He also emphasized the need for strong leadership to see the economy through the economic transition. In an interview with Bloomberg TV's Erik Schatzker, Dalio said: 

"There are good ways to manage these things, and there are bad ways to manage these things. Leadership is very important."

"We are in conflict with China. You can call it a war."

At the end of July 2020, billionaire investor Ray Dalio expressed concern about the mounting tensions between the United States and China, cautioning that it could result in a "capital war" that would significantly devalue the dollar. On Fox News' "Sunday Morning Futures", Dalio stated: 

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