Yesterday (Jan 10 US time), Ray Dalio had a dialogue with Wang Huiyao (president of the Center for China & globalization CCG). The conversation is available on Youtube here. I believe the discussion is available in China too. And here are my thoughts about it:
- Timing: the timing of this dialogue is interesting. It is in the new year, right after the zero Covid policy was suddenly abandoned in China, and after the recent diplomatic “restart” between President Biden and President Xi. I don’t think the messages from this dialogue would have been heard or received if the two important events above didn’t happen.
- Ray’s messages continue to be consistent with his previous conversation and writings, especially about the domestic challenges within the US and within China. He is not shy in pointing out big domestic challenges in both countries like the wealth/value gaps in the US, the economic slump in China during the past 3 years, the real estate debt and the environmental challenges.
- Ray also points out that while the bilateral relationship between the US and China is the most important one from a global perspective, there are many other countries worldwide. And most of them do not want to choose side.
- This message is similar to what the Singapore Prime Minister and other senior Singapore officials have been saying for a long time. It is not just China but increasingly the US who is pushing other countries to choose between the US or China behind-closed-door meetings.
- Ray’s assessment of the global economy in 2023 is not surprising. It is consistent with his previous writing/Bridgewater’s analysis, and many other macroeconomists. The US, Western Europe, and many other emerging markets will have a hard time. Recession / Stagflation is the base case, given where we are with the debt cycle in the US and other advanced economies.
- For emerging economies (including China), if the US and other advanced economies are not doing well, that represents a challenging export environment for them. And that is not great because export has been a good way to make money for emerging economies.
- Interestingly, he estimates that China 2023 GDP growth is between 4.5% – 5%. I consider this low surprisingly low, given the low base in 2022.
- His tone and messages toward the end of the conversation are more optimistic than many of his previous writings. On average, people in both countries (the US and China) enjoy much better living standards than before. Many advanced technologies are evolving quickly, which have the potential to improve human lives and productivity drastically. So as long as we don’t have a military conflict (or a proxy military conflict) between US and China, there is hope.
Overall, I think it is a good conversation and I recommend it. If you watch it, let me know what you think below.
Thanks,
Chandler