"Although market fluctuations are significant in the short term, with the implementation of supportive policies, the Chinese economy may experience a rebound. Investors are advised to focus on long-term investment plans and maintain diversification in the asset allocation process to reasonably disperse risks," said Ray Dalio, founder of Bridgewater Associates, at the Greenwich Economic Forum.

On October 8th local time, the seventh Greenwich Economic Forum was held in Greenwich, Connecticut, USA, attracting professionals from the global finance, investment, and economic sectors. Over the course of the two-day conference, participants engaged in in-depth discussions on hot topics such as global macroeconomics, wealth management, family offices, AI and blockchain technology, digital assets, emerging market opportunities, energy transition, and sustainable development. The recent series of policy benefits announced in China also became one of the focal points of the forum.

Dalio emphasized the importance of focusing on long-term opportunities in the Chinese market.

In his speech, Dalio discussed five major issue frameworks that encompass key factors affecting the global economy and social development: First is debt and monetization: Countries around the world are generally facing debt issues. As debt levels rise, governments often alleviate pressure by printing money or monetizing debt, which can have long-term impacts on economic stability; Second is internal social conflict: Economic inequality and social division exacerbate conflicts within countries, potentially leading to political turmoil and social unrest; Third is major power geopolitical conflict: The geopolitical games between the world's major countries are intensifying, which may affect global trade, economic cooperation, and security situations. Fourth is natural disasters and plagues: Uncontrollable external factors such as climate change, natural disasters, and infectious diseases pose a significant threat to the global economy and human life. Fifth is the invention of new technologies: The rapid development of new technologies not only drives economic growth but also brings about social change, having a profound impact on employment, industrial structure, and more.

Advertisement

Dalio also conducted an in-depth analysis of China's economic situation. He reviewed his long-term cooperation with China since 1984, stating that the main challenges China currently faces include local government debt issues and a sluggish real estate market. He pointed out that in the past, local governments obtained funds by selling land and borrowing, but this model is now difficult to sustain, hence the Chinese government needs to provide more financial support. He believes that the key to solving this problem lies in debt restructuring and appropriate monetary policy adjustments, which is to keep interest rates below the nominal growth rate to prevent too much capital from being hoarded and not flowing into the market.

Despite the current economic challenges in China, Dalio remains optimistic about China's long-term prospects. He believes that the Chinese government will eventually take sufficient policy measures to promote economic recovery, and investors should focus on long-term opportunities in the Chinese market. He specifically mentioned that although market fluctuations are significant in the short term, the Chinese economy may rebound with the implementation of government policy support. He advises investors to maintain diversification in asset allocation and to reasonably disperse risks.

Regarding the United States, Dalio believes that after announcing a 50 basis point rate cut in September, the Federal Reserve will not make another "significant rate cut."

Finally, Dalio emphasized that the current global geopolitical risks are rising, especially the possibility of internal and external conflicts has significantly increased. In such an environment, investors need to pay more attention to diversified allocation in global markets. He suggests that investors choose to invest in countries with sound fiscal conditions, high operational efficiency, and less likely to be involved in international conflicts, which can reduce risks against the backdrop of increasing global uncertainty.China's Economic Stimulus Policies Boost Market Confidence

Speaking of China's recent release of a series of supportive policies, KraneShares' investment strategist Henry Greene told reporters from Southern Finance that this is the largest economic stimulus action since the pandemic, which not only has an important impact on China's domestic market but also has elicited a positive response from international investors. "We have a very positive attitude towards this stimulus plan, especially the establishment of the stock market stabilization fund and the actions of asset management companies buying stocks through the replacement plan, which have greatly boosted market confidence."

Greene particularly emphasized that the introduction of a series of monetary policies has had a particularly positive impact on China's stock market, especially after the Federal Reserve unexpectedly cut interest rates by 50 basis points in September, the international capital market's attention to emerging markets has greatly increased. "This not only stabilizes China's economy but also allows international investors to refocus on emerging markets. We see that global capital is flowing back into emerging markets, and China is an important part of it."