Billionaire Investor and hedge fund guru, Ray Dalio, said the U.S.-China relations are “on the brink of red lines,” though he doesn’t foresee a war resulting from this tension.
What Happened: At the Greenwich Economic Forum on Tuesday, Dalio, the founder of Bridgewater Associates, discussed the mounting tension between Xi Jinping‘s administration and Team Biden.
He highlighted the “irreconcilable differences” between the two nations, including issues related to Taiwan, the competition over semiconductor chips, and geopolitical disputes.
“The breaking point is if the United States said ‘We are in favor of the independence of Taiwan.’ That’s the equivalent of [a] declaration of war,” said Dalio.
“And because of our political issues now, internally, you are going to be likely to push that — because of the fact that many in the Congress and so on would say ‘we’ll defend Taiwan,'” he added.
China considers Taiwan, a self-governed island, as part of its territory and has escalated military exercises around Taipei.
However, he does not expect a full-scale war to occur between the two nations, which is a shift from his previous comments in April on LinkedIn, where he suggested the possibility of a war. “Neither country wants to go to war. Everybody’s afraid of what that war would be like because it would be devastating economically and politically.”
“These issues will remain and probably intensify over the next five to 10 years, but they will be at that edge,” he added.
Why It Matters: The escalating tensions between the US and China have been a source of concern for some time. In May, the former chief of the U.N. Security Council also asserted that war between the two nations was unlikely.
The Biden administration’s recent support for Taiwan last month, including an $80 million military financing program, has been met with stern warnings from China. Chinese president’s mouthpiece cautioned Washington that this support had overstepped a "red line," potentially sparking severe repercussions.
Beijing has repeatedly voiced its opposition to any U.S. defense aid to Taiwan. It urged Washington to cease heightening tensions across the Taiwan Strait and to stop arming Taiwan.
Meanwhile, a high-ranking executive from the U.S.-based risk advisory firm Kroll has been detained in Beijing for over two months. According to reports, Chan is assisting in an investigation related to a case from a few years ago.
Photo courtesy: World Economic Forum On Flickr
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