American self-made billionaire Ray Dalio has a plan to resolve the ongoing trade war between the US and China, warning of the consequences of continued tensions and the current situation between the world's two largest economies.
The founder and former CEO of hedge fund giant Bridgewater said, "I was pleased, but not surprised, that the US and China would negotiate tariffs, negotiations that go far beyond trade."
Dalio added, "In my dreams, I imagine the US and China achieving a remarkable rebalancing, reducing unsustainable excesses to sustainable levels."
He said, "In other words, the US has become the world's dominant consumer and borrower, which has led to increased dependence on foreigners selling their goods to American consumers, on US bond yields, and on other US investments."
He added, "China has become the world's dominant manufacturer and lender, which has led to increased dependence on selling, lending, and investing in other markets. All of these things threaten a world of interdependencies, and they must be corrected."
Dalio continued, "What should be done about this situation?" Quite simply, the United States needs to: reduce its deficit, increase manufacturing, reduce consumption, and ease its debt burden, he continued. China needs to: reduce its surplus and reduce manufacturing.