Trump administration may be ‘inching toward bigger moves’ against China, Ray Dalio says

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Ray Dalio, founder of investment firm Bridgewater Associates, speaking at the WEF in Davos, Switzerland on Jan. 22, 2019.

Adam Galica | CNBC

Billionaire hedge fund manager Ray Dalio said the White House’s deliberation on a block on U.S. investments in China made him wonder if bigger moves are on the way.

Dalio, founder of the world’s largest hedge fund, said in a lengthy LinkedIn post President Donald Trump could use special emergency powers like the freezing of Japanese assets and embargoing of oil to Japan in the 1940s.

“Regarding the capital and currency wars, the ability of the US president to unilaterally cut off capital flows to China and also freeze payments on the debts owed to China and also use sanctions to inhibit non-American financial transactions with China must be considered as possibilities,” Dalio, the co-chairman of Bridgewater Associates, said.

“That’s why the proposed step of limiting American portfolio investments in China makes me both think about the implications of this step and wonder if it is an inching toward bigger moves,” he added.

Reports on Friday revealed Trump administration officials are weighing some curbs on U.S. investments in China, including delisting Chinese companies from American stock exchanges and preventing U.S. government pension funds from investing in the Chinese market. The discussions came as the U.S. looks for additional levers of influence in trade talks, which resume on Oct. 10 in Washington.

The U.S. Treasury Department responded Sunday that “the administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time.” White House trade advisor Peter Navarro called the reports “fake news” in an interview with CNBC.

“To me, last week’s developments seemed like the most recent logical steps in this classic dangerous journey that is analogous with that which occurred in the 1935-45 period,” Dalio said.

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