Billionaire investor Ray Dalio recently made a strong statement about China's manufacturing edge, but Elon Musk quickly challenged his claim. Musk publicly corrected Dalio's statement, using data from Grok, his AI chatbot. This sparked a short conversation between two of the biggest names in business and finance.
Dalio’s Claim
In an interview with Tucker Carlson on Feb. 21, Dalio suggested that China controls 33% of global manufacturing and asserted that the U.S. would “never catch up to China in manufacturing in our lifetimes.” He pointed out that China is not just leading in sheer production numbers but also in robotics, chip production, and AI applications.
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Musk, however, wasn't convinced. He took to X to challenge Dalio's data, saying, “Perhaps Ray Dalio has different data, but Grok thinks US, Europe & Japan manufacturing output is significantly higher than China.”
Musk also shared a link to Grok's analysis, which suggested a different picture of global manufacturing output.
Dalio’s Response
Dalio quickly responded, thanking Musk for the correction and admitting he had been “a bit sloppy.” He clarified that he had meant to say China's manufacturing output is greater than that of the U.S., Germany, and Japan combined, rather than all of Europe. However, he maintained that China remains the dominant force in global manufacturing.
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He broke it down with numbers:
- China produces around 30% of the world's goods.
- The U.S. (15%), Germany (5%), and Japan (6%) collectively produce about 26%.
Dalio further argued that if you factor in lower production costs in China, the country's real influence in global manufacturing is even more significant. He even praised Musk’s AI assistant, saying, “By the way, I thought Grok's answer and analysis on this were great.”
Dalio Warns of a Looming U.S. Debt Crisis
Dalio didn't stop at manufacturing. He used the exchange to raise concerns about the U.S. budget deficit, warning that unless it is brought down to 3% of GDP, the U.S. could face major economic problems. According to him, “If we don't get the US budget deficit down to about 3% of GDP, there will be too much supply of US bonds relative to the demand for them, which will produce real problems.”
He then asked Musk for his thoughts, inviting further discussion.
Dalio’s Concerns About a ‘Type of Civil War’
In the same interview, Dalio expressed his belief that the U.S. is experiencing a “type of civil war,” where political and social divisions have become too deep to resolve through compromise. He cautions that widening financial disparities, polarization, and institutional mistrust may drive the nation closer to war than peace.
A Debate That Highlights China's Growing Strength
This discussion between Musk and Dalio shows the ongoing debate about China's role in the world economy. The U.S., Germany and Japan combined still make more products than China. But Dalio argues that China is more efficient and makes things at a lower cost, which gives it an edge.
Regardless of the precise figures, the general consensus is that China is a significant manufacturing power and that the United States and its allies must rise to the challenge if they hope to remain competitive.
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