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Billionaire Ray Dalio warned on Thursday that the US and China are on the brink of war.
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And the two giants threaten to take the rest of the world with them, Dalio said.
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The 2024 US election will only worsen relations between the two powers, he added.
The US and China are on the brink of war, billionaire and renowned Chinese investor Ray Dalio warned.
Both sides are at high risk of crossing each other’s red lines, and diplomacy between them is clearly failing, Dalio wrote in a memo on LinkedIn on Thursday.
“The United States and China are on the brink of war and cannot speak,” Dalio’s stark message reads.
Dalio, who runs the largest foreign hedge fund in China and has 40 years of experience investing in the country, said he penned his thoughts after a recent meeting with policymakers, Chinese citizens and China experts from around the world.
The billionaire fears the conflict will escalate over several immediate flashpoints: quarrels over Taiwan, confrontations between US and Chinese planes and ships, the war in Ukraine and threats of economic sanctions.
While China and the US know they must resolve the conflict, “there is a growing belief that the inevitable trajectory is toward war,” Dalio said.
Washington and Beijing are showing that they cannot solve these problems, he added. Whenever they interact, “discussions about big, important things have turned into exchanges of accusations that worsen rather than help relationships,” he wrote.
So it’s better if both sides try not to discuss these issues at all, Dalio suggested.
The 2024 US election will also exacerbate tensions, Dalio predicted. Politicians seeking re-election will likely try to keep pushing the boundaries with Beijing to appeal to voters’ anti-China sentiment, the billionaire said.
“The aggressive political influences in the United States will put more pressure on the relationship over the next 18 months due to the rise of the 2024 election season,” Dalio wrote. “That will be a very risky period, because China and the US are already on the brink of war.”
An additional risk is that the US leadership is “fragmented” in the way it projects anti-Chinese views, Dalio said. He cited then-Speaker of the House of Representatives Nancy Pelosi’s visit to Taiwan in August. Chinese leader Xi Jinping had personally asked President Joe Biden to block the trip, but Biden said he had no control over Pelosi’s foreign diplomacy, The Washington Post reported.
And as both powers seek to protect their sources of essential technologies and minerals, they are causing countries around the world to take sides, Dalio further warned.
He cited the US trying to prevent South Korean chipmakers from increasing sales to China if Beijing approves Idaho-based Micron Technology.
Dalio also pointed to Saudi Arabia – traditionally an ally of the US – which recently struck new deals with China and Russia, and French President Emmanuel Macron who criticized Washington for provoking China.
The US and China, he said, are “like two giants wrestling six inches from the edge of a cliff, threatening to draw others into this dangerous fight.”
“All things considered, I think the bigger provocations will most likely come from the US side, and I fear that will lead to the line being crossed,” Dalio wrote.
Still, he doesn’t believe those grievances will prompt China to declare war anytime soon, or even within the next three years.
“I want to emphasize that by saying they are on the edge, I don’t mean to say they will necessarily go over the edge,” Dalio wrote.
The billionaire recommended several steps to de-escalate tensions. This included hosting Xi in San Francisco at the APEC meeting in November, and sending key US policymakers and congressional leaders to China.
“Let all sides make it clear that peace is better than war,” Dalio said. “That working towards agreement on ways to reduce the likelihood of having the worst kinds of wars is a top priority, and that gradually building agreements to mitigate the less and less bad kinds of conflict would be the best course of action.”
Read the original article on Business Insider
