Ray Dalio: Trump-Xi meeting to focus on trade, capital flows

SHANGHAI/BEIJING — Hedge fund magnate Ray Dalio is optimistic that a highly anticipated meeting next month of the U.S. and Chinese presidents can go a long way toward soothing bilateral tensions.

“The next meeting will have a particular emphasis on trade, but also capital flows,” the founder of Bridgewater Associates told CNBC’s Eunice Yoon on Wednesday in Shanghai.

Dalio said he expected the two leaders to demonstrate “empathy” and work through challenges together. “Investors should be encouraged by these things,” he said, noting it “carries through” to investments and markets.

While the three major U.S. averages have rebounded from losses during trade tensions about a year ago, the S&P 500 is still down more than 3% so far this year, due in part to concerns stemming from the Iran war.

U.S. President Donald Trump is scheduled to visit Beijing on May 14 and 15 to meet with Chinese President Xi Jinping. Trump was originally set to travel in late March, but delayed the plans due to the Iran war.

Lack of contact between the U.S. and China is “the biggest source” of bilateral tensions, said Dalio, wearing a pin bearing both the U.S. and Chinese flags.

He was in Shanghai for a ceremony marking the end of a 10-day ocean exploration voyage that was organized by his non-profit OceanX and U.S. and Chinese groups to support bilateral relations. Dalio founded OceanX in 2016 with his son Mark to promote exploration and stewardship of ocean resources.

The U.S. consul general in Shanghai and a vice mayor of the Chinese city also attended the Shanghai event. Ten students from each of the two countries participated in the trip, which started in Hong Kong.

The “Chinese-American relationships and the oceans are the two most important things for the well-being of humanity,” Dalio said.

As U.S.-China tensions escalated over the years, climate has been widely seen as a rare area of cooperation between the two countries.

A Trump-Xi meeting next month could be the first of four times the two leaders see each other in person this year, Dalio noted. The “world order’s changing and these two leaders need to discuss how best to approach that,” he added.

The presidents of the world’s two largest economies met in South Korea last fall, where they agreed to lower tariffs for one year. Beijing also postponed implementation of stricter rare earth export controls by the same period.

When asked about the Iran war and Trump’s two-week ceasefire announcement, Dalio emphasized that investors should look beyond the “news of the day” and said a “world war of sorts is going on.” In a LinkedIn post published Tuesday, he said the current combination of military confrontations, geopolitical and economic tensions bore comparison to past world wars.