US-China relations are ‘on the brink of red lines’ but war is still unlikely, says hedge fund legend Ray Dalio

Hedge fund legend Ray Dalio said US-China relations are “on the brink of red lines.””Irreconcilable differences” between the two include Taiwan, their rivalry over chips, and geopolitics.Even so, Dalio said he doesn’t think a war between the US and China is likely.

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The US and China relationship is “on the brink of red lines” — but war is unlikely, said hedge fund legend Ray Dalio at the Greenwich Economic Forum on Tuesday, according to a Bloomberg recording.

Dalio said at the forum there are “irreconcilable differences” between the world’s two latest economies — including Taiwan, the rivalry over semiconductor chips, and geopolitics.

China claims self-ruled Taiwan as its territory and has been ramping up military drills around the island.

“The breaking point is if the United States said ‘we are in favor of the independence of Taiwan.’ That’s the equivalent of declaration of war,” said Dalio, who is the founder of hedge fund giant Bridgewater Associates.

“And because of our political issues now, internally, you are going to be likely to push that — because of the fact that many in the Congress and so on would say ‘we’ll defend Taiwan,'” he added.

Even so, Dalio said he doesn’t think a war between the US and China is likely.

Dalio’s latest assessment on US-China relations appears to dial down on his comments in April when he said in a LinkedIn post that the two countries were on the brink of war.

“Neither country wants to go to war. Everybody’s afraid of what that war would be like because it would be devastating economically and politically,” said Dalio on Tuesday.

“These issues will remain and probably intensify over the next five to 10 years, but they will be at that edge,” he added.

Dalio stepped down as Bridgewater’s co-CIO in October last year but was involved in setting up the hedge fund’s first onshore China fund in 2018.

Onshore assets under management under Bridgewater’s flagship China fund stood at 30 billion Chinese yuan, or $4.1 billion, as of August, Bloomberg reported on September 15, citing people familiar with the matter. They rose from over 20 billion Chinese yuan last year.

Dalio did not immediately respond to Insider’s request for additional comments sent outside regular business hours.

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