Bridgewater Associates’ Ray Dalio outlines path Trump could take to limit US capital flows to China
- In a post, Dalio wonders if the US is ‘inching toward bigger moves’
- Bridgewater co-chairman points to the US freezing Japanese assets and embargoing oil to Japan in the late 1930s to early 1940s as a potential example of how special emergency powers could be used by the president
Ray Dalio, the billionaire founder of the world’s biggest hedge fund, said preliminary discussions on limiting US investments in China make him wonder if the Trump administration is “inching toward bigger moves”.
In a new essay posted on LinkedIn on Tuesday, the Bridgewater Associates co-chairman points to the US freezing Japanese assets and embargoing oil to Japan in the late 1930s to early 1940s as a potential example of how special emergency powers could be used by the president.
“Regarding the capital and currency wars, the ability of the US president to unilaterally cut off capital flows to China and also freeze payments on the debts owed to China, and also use sanctions to inhibit non-American financial transactions with China must be considered as possibilities,” Dalio wrote. “That’s why the proposed step of limiting American portfolio investments in China makes me both think about the implications of this step and wonder if it is an inching toward bigger moves.”
Bloomberg News on Friday reported that Larry Kudlow, the head of President Donald Trump’s National Economic Council, was leading deliberations inside the White House over what some hawks have labelled a potential “financial decoupling” of the world’s two largest economies.
The options discussed have included forcing a delisting of Chinese companies from US exchanges, imposing limits on investments in Chinese markets by US government pension funds and putting caps on the value of Chinese companies included in indexes managed by US firms, according to people familiar with and involved in the discussions.
In a statement over the weekend, a spokeswoman for US Treasury Secretary Steven Mnuchin said there were no current plans to stop Chinese companies from listing on US exchanges.