Ray Dalio, the billionaire and founder of Bridgewater Associates LP, spoke during a Bloomberg Television interview in New York City on Wednesday, April 3, 2024. Victor J. Blue | Bloomberg | Getty Images. Ray Dalio, founder of Bridgewater Associates, stated at a conference on Friday that China needs to implement a “beautiful deleveraging” alongside its recent stimulus efforts to prevent a debt crisis. The billionaire investor describes a “beautiful deleveraging” as a methodical way to address deficits through debt restructuring, alongside creating money and debt monetization. He noted that while restructuring leads to deflation, creating money results in inflation, making it an effective strategy to lessen debt burdens. “The key question about China is how it is handling its debt problem,” Dalio said at the FutureChina Global Forum in Singapore. “They have the ability to do this, and I think they are willing to do so.” He noted that “[recent] policies” are showing this. Since late September, Beijing has introduced multiple rounds of stimulus and reform measures to strengthen its economy. Dalio expressed that while the ongoing changes are impressive, debt restructuring remains necessary. Alongside the recent stimulus efforts from Beijing, the markets are anticipating whether policymakers will introduce a fiscal stimulus package, which some economists believe should be around 10 trillion yuan ($1.4 trillion). Dalio remarked that although it’s simple to inject money and credit into the economy, doing so could exacerbate existing issues. “It needs to be done correctly, as part of a restructuring,” he emphasized. That is where it gets difficult. I believe that will be the real challenge. Dalio pointed out additional challenges, such as the high level of debt at the local level in China and the aging population. The founder of Bridgewater recently indicated that Beijing has shown less support for capitalism lately. On Friday, he noted that it is uncertain whether China can sustain the “vitality of the private markets” and encourage the entrepreneurship and creativity that arise from individuals in capital markets. It is still uncertain whether it is still considered “glorious to be rich in China.” This year, Beijing has taken a tough stance against “wealth flaunting.”
