I come back to Ray Dalio’s article because it is significant – not only for what he says but for who he is as well. Dalio is not an academic or a China expert – so many of people with that background regularly write about China – for and against.
What is unusual about Dalio is that he is a billionaire and the owner of a Hedge Fund. His first visit to China was in 1985 and he has returned regularly and witnessed the rapid changes, but more importantly he views them without the anti-communist prejudices of many “experts” that stands in the way of a full understanding of the significance of China’s advance. He is not a Communist – far from it. Dalio is a very successful exponent of the capitalist system and yet he views China from the perspective of “What Works”.
He acknowledges that China has a problem with bad debt and property speculation. He could have elaborated and referred to corruption and social stratification. He could have drawn attention to regional imbalances in economic development and he could have dwelt on the failures of the communist system that failed to halt the coronavirus earlier or on Party intolerance of political dissent. Every country has its faults, shortcomings and tensions – some more than most.
But with China, the scale of its success is the stand out feature – From the “Sick Man of Asia” in 1949 to a “moderately prosperous population today of 1.4bn people”
To illustrate the point, Dalio notes that China has a balance of payments surplus and in 2020 one half of the world’s initial public offering will be in China, and since 1984 per capita incomes have risen more than 30 times and life expectancy has increased by ten years. But what separates Dalio from the persistent negative critics of China is the fact, as he states, that many are missing these changes because of “a persistent anti-China bias”.
He does not explore this bias – is it just anti-communism, is it racism or is it just envy. Another time.
Dalio does refer to the Uyghurs, Taiwan and Hong Kong but not in any depth.
Dalio observes that “China’s fundamentals are strong” and he expects to see Chinese markets increasingly opening up and capital inflows will support the currency – already at a two year high. Dalio concludes by saying “in the long run, timeless and universal truths determine why countries succeed or fail. In brief, empires rise when they are productive, financially sound, earn more than they spend and increase assets faster than liabilities. This tends to happen when their people are well educated, work hard and behave civilly…the fundamentals clearly favour China”