Ray Dalio ‘wrong’ about tech crackdown in China, economist says

Ray Dalio, billionaire investor and founder of Bridgewater Associates, pauses during an interview with Bloomberg Television at the Grand Hyatt in Beijing, China on Tuesday February 27, 2018.

Giulia Marchi | Bloomberg via Getty Images

Chinese expert George Magnus disagrees with Ray Dalio of Bridgewater Associates over Beijing’s technological crackdown.

In a LinkedIn post this month, Dalio said investors mistakenly viewed China’s crackdown on industries such as fintech, online tutoring and food delivery to be “anti-capitalist.” .

“The trend over the past 40 years has clearly been so strongly towards developing a market economy with capital markets, with entrepreneurs and capitalists getting rich,” said the billionaire hedge fund manager.

“As a result, they missed what is happening in China and will likely continue to miss,” Dalio added.

Magnus thinks Dalio is wrong. The economist, who is associated with the China Center at Oxford University, told CNBC on Wednesday that Beijing’s crackdown was about the Communist Party’s continued political “control”.

“I think Dalio is wrong,” Magnus told CNBC’s “Street Signs Europe”. “Obviously he’s got a big business in China, so he’d say that, wouldn’t he?” ”

Neither Dalio nor Bridgewater Associates were immediately available for comment at the time of posting.

Dalio has made a number of bullish comments on China over the past year. In October he warned investors not to ignore China’s rise to power as an economic superpower. During this time, Dalio’s Bridgewater Associates fund was accelerate investments on the Chinese stock market lately.

And, despite China’s scrutiny of its huge tech sector, Dalio is doubling down. “Don’t misunderstand these fluctuations as changes in trends, and don’t expect this Chinese state capitalism to be exactly like Western capitalism,” he said recently.

The Chinese Communist Party is “essentially determined to control these tech companies and entrepreneurs, despite being the essence of China’s vibrant economy,” Magnus said.

George Magnus, then chief economist of UBS Warburg, addresses a luncheon on April 11, 2002.

Dustin Shum | South China Morning Post via Getty Images

Entrepreneurs like Alibaba founder Jack Ma and Tencent chief Pony Ma are “supposed to support the party’s goals,” he added.

China’s move to step up oversight of its tech industry began last year when comments from charismatic billionaire Ma criticizing regulators forced Ant Group, Alibaba’s fintech subsidiary, to drop its planned initial public offering.

Speculation has grown about Ma’s whereabouts after he disappeared from the public eye for months. According to the partners, the entrepreneur is keeping a low profile. In June, Alibaba co-founder Joe Tsai told CNBC that Ma was “doing fine” and had “started painting as a hobby.”

More recently, Beijing has extended its crackdown on several other companies. Rideshare company Didi, which went public in the United States earlier this year, fell 38% below its offering price following a cybersecurity investigation by Chinese regulators.

Authorities have also targeted private tutoring services, food delivery companies and the video game industry.

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