Ray Dalio's take on China-US relationship

[njf]

Ray Dalio is making some waves with his post on the current state of China-US relationship:

https://www.linkedin.com/pulse/what-i-think-going-1-china-us-relations-2-other-countries-ray-dalio

He is generally quite astute in his assessment of the current state of affairs.  However, there is still a bit of head-in-the-sand type of denial-ism.   The economic war is already in full steam.

[Mavica]

He's emphasizing more than the economic was that's existed for decades.  Listening to him, we should build underground bunkers.

[stevenkesslar]

20 hours ago, njf said:

Ray Dalio is making some waves with his post on the current state of China-US relationship:

Very thoughtful essay.  Thanks for posting that.

A few big pieces of data to add, none of which are surprises.

War in Ukraine widens global divide in public attitudes to US, China and Russia – report

“Mega-dataset” of public opinion covering 97% of the planet finds a “world divided” between liberal US-backing populations and illiberal nations favouring China and Russia.

It is now clear that we live in a multi-polar world.  With lots of big countries like India not wanting to take sides. 

I don't blame them.  When the US was closest to being a unilateral world power after the breakup of the USSR and into the early 21st century, arguably the two biggest things we did were:  1) the Iraq War, and 2) the global financial crisis.  One was based on a lie.  And the other originated in misplaced faith in the idea that American mortgages are rock solid and a safe bet.  We kind of fucked it up.  To me, a riot at The Capitol is child's play compared to the Iraq war and the GFC.

This is the most humbling statistic in that report:

Quote

Among the 1.2 billion people who inhabit the world’s liberal democracies, three-quarters (75%) now hold a negative view of China, and 87% a negative view of Russia, according to the report ...  Yet among the 6.3 billion who live in the world’s remaining 136 countries, the opposite is the case – with 70% of people feeling positively towards China and 66% towards Russia.

Speaking as an American, we're outnumbered.

That said, this Voice of America article adds some important balance.  While all these unaligned countries in places like Africa view China and Russia favorably, they also view the US slightly more favorably than China and Russia.  When asked whether they would rather China or the US be the world's superpower, overwhelming majorities would prefer the US to be superpower:  59 % in South Africa, 77 % in Nigeria, 80 % in Kenya.  Maybe the US is pushier about our values and systems.  But those numbers suggest our values and systems don't suck in the eyes of the nonaligned.

I think Dalio hit the nail on the head regarding the dilemma  most countries and leaders are feeling with this comment:

Quote

Still, I think virtually all countries want to stay out of the conflict with China and want to go about business as usual recognizing that the days of doing business as usual are over. 

What I found slightly surprising in Dalio's comments is the sense of how China is perhaps not very well prepared.  First, if I buy what he says, they don't want war.  Second, they are years behind on things like AI.  Third, they are feeling increasingly threatened not only by the US but by other regional powers allied with the US:  Australia, Japan, South Korea.  Dalio is right that how those relationships shake out when the going gets tougher will be critical.   

Add that China, not the US, is the nation with the demographic time bomb.  I know Dalio is talking five months or five years out.  Not fifty years.  But I can buy the sense Dalio expresses that if anything China feels like it is being baited into a war - economic or military -  it does not necessarily want.

Oh.  And one other teeny, tiny little thing.

 

With all due respect to the 6.2 billion people in the world who mostly respect China and Russia, if you look at a trade map China is fucked.  No wonder they don't want to be baited into a global economic war.  The US has 10 times the trade clout of Russia.  Take that Vlad.  Australia has the same $48 billion in trade Russia offers.  Saudi Arabia may be China's great new pals, with oil aplenty.  But The Netherlands alone does five times as much trade with China.  Chips, anyone? 😉

Yeah, I'm bragging a little.  But I also find this comforting, since like everyone I don't want WWIII.  In the 30's, in the run up to WWII, two of the fastest growing economies in the world were Germany and Japan. Because they were militarizing and preparing for war.  The run up to war was basically an economic growth engine for them.  China today is more like the opposite, at least based on trade.  They have a lot more to lose than to gain - even moreso than the US. 

Dalio's comments based on his relationships there suggest the Chinese know it.  Hopefully the US does, too.