A billionaire investor and founder of Bridgewater Associates, Ray Dalio feels that despite growing tensions on both sides, the US and China have retreated off the “brink” of conflict. Before US President Joe Biden and Chinese President Xi Jinping met on the fringes of the 30th Asia Pacific Economic Cooperation (APEC) in San Francisco on Wednesday, November 15, the global financial expert shared his observations.
“The realisations by both sides that they were at the brink and the looking over the brink into the abyss scared the leaders on both sides so, starting in June, there were a number of interactions designed to pull back from the brink, including beginning working towards a good APEC meeting between President Biden and President Xi, which will lead to some modest increased cooperation,” the billionaire investor wrote on Tuesday, sharing a brief summary of his analysis.
While the likelihood of a “military war” between the US and China is decreasing, he made the case that a different kind of “war” between the two powers “will remain intense and concerning.” Dalio continued, stating that he has a “very rough estimate” of 35% for the likelihood of US-China military conflict during the next ten years.
In the LinkedIn article, Dalio added that this new kind of warfare “is not so new,” as anyone who has read Sun Tzu’s “Art of War,” a roughly 2,500-year-old manual on battle, will recognise it. “This sort of war is fought by using deception, by having the other side expend resources while saving one’s own, and by using the opponent’s own circumstances to weaken them and take advantage of their weakness,” the hedge fund founder continued in his letter.
He argues that developing and utilising military might will not be as significant as how successfully each side handles its own financial, economic, technological, and social capabilities in comparison to the opponent. In the event that the other non-military tactic is unsuccessful, military might is still crucial for frightening the adversary and potentially employing them.
History, according to Dalio, has shown that the victor of the “technology war” also wins the “economic and geopolitical wars.” They typically manifest as the creation of novel technology for use in armaments, as was the case with the US’s development of the atomic bomb during World War II. The author stated, “With chips and AI, quantum computing, and many other technologies, including those we don’t know about, we can see this technology war principle playing out today.”
“Rather, we should expect to see a more behind-the-scenes, Cold-War-style great power conflict,” he cautioned further.
In addition to Ray Dalio, other notable figures who have discussed how the war may cause a severe recession and upset the financial markets include CEOs of JPMorgan and BlackRock, David Eirnhorn, and Larry Fink.
According to reports, the White House has emphasised that “enhancing communication to prevent potential conflict between the two nations” is one of the summit’s main goals. Discussion points are expected to cover a wide range of subjects, such as human rights, artificial intelligence, trade relations, Middle East crises, and Russia’s actions in Ukraine.