(Bloomberg) — Ray Dalio, founder of Bridgewater Associates, said that the United States is losing credibility as a global power willing to fight to defend its interests, while China is accumulating wealth and influence, fundamentally reshaping the way the rest of the world views the two nations.
“At this moment, that perception is changing,” Dalio said in an interview on Bloomberg Television’s Wall Street Week.
With about 750 military installations spread across 80 countries, the U.S. has long been viewed as a reliable partner in case of attack, Dalio said. But, after spending about a month traveling across Asia, including 10 days in China talking to several leaders, he said he detected a major shift, with countries increasingly believing that “you cannot rely on the United States to wage this war.”
Dalio spoke in the same week that President Donald Trump met Xi Jinping, of China, amid the stalemate in the U.S. war with Iran. His remarks reinforced his longstanding view that U.S. influence is waning relative to China’s, a perspective that gains weight due to his experience in China with Bridgewater, the world’s largest hedge fund — experience that has drawn some criticism for its ties to leaders in Beijing.
The global acknowledgment of this new influence is important to China, said Dalio, 76 years old. The Chinese economy now accounts for about 60% to 70% of the size of the U.S. economy, up more than threefold in the last 20 years.
Although China does not seek to conquer or occupy other nations, he said, the country places great importance on recognition by visiting presidents and prime ministers.
“We are seeing several leaders going to China,” Dalio said. “It’s like the tax system that existed throughout history, so that they come to recognize the differences of power,” he stated.
It was a theme he returned to several times during the interview.
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“Therefore, this tax system is a hierarchical system,” Dalio said. “What matters when dealing with other countries is how this affects your trade and your security. And now we are entering, and I believe, in their view, into a period in which there will be a tax system in which power relations will be what matters.”
This shift has direct implications for the market, Dalio said, as investors need to navigate a turbulent period in which currency values face risks and uncertainty requires liquidity and diversification, including gold.
