Ray Dalio is wrong regarding China's tech crackdown, an economist says

August 27, 2021: -China expert George Magnus disagrees with Bridgewater Associates’ Ray Dalio on the tech crackdown of Beijing.

This month, in a LinkedIn post, Dalio said investors were misconstruing a clampdown by China on sectors that include fintech, online tutoring, and food delivery as “anti-capitalist.”

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

“As a result, they’ve missed out on what’s going on in China and probably will continue to miss out,” Dalio said.

Magnus thinks Dalio is mistaken. On Wednesday, the economist, an associate at the University of Oxford’s China Centre, told CNBC that Beijing’s crackdown is all about the Communist Party’s pursuit of political “control.”

Dalio has made several bullish comments on China in the last year. In October, he gave a warning to the investors not to ignore China’s increase as an economic superpower. Meanwhile, Bridgewater Associates has been ramping up investments into the stock market of China lately.

Communist Party of China is “basically driven to control these tech firms and entrepreneurs, even though they are the essence of the dynamism of China’s economy,” Magnus said.

Entrepreneurs such as Alibaba founder Jack Ma and Tencent chief Pony Ma are “supposed to support the party’s goals,” he further said.

China’s move of ramping oversight of its tech industry started in the previous year when comments from charismatic billionaire Ma criticizing regulators forced Ant Group, the fintech affiliate of Alibaba, to scrap its planned in the beginning public offering.

Speculation mounted over Ma’s whereabouts after disappearing from the public eye for many months.

Recently, Beijing has extended its crackdown to several other companies. Ride-hailing firm Didi, which was public in the U.S. earlier this year, has fallen 38% less than its offering price on the back of a cybersecurity probe from Chinese regulators.

Authorities targeted private tutoring services, food delivery firms, and the video game industry.