What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stockton investing today we're going over some recent comments by billionaire hedge fund manager, ray dalio about the deteriorating state of u.s china relations according to dalio. The us is already at war with china, it just hasn't evolved to a military conflict. Yet it started with former president donald trump's trade war with china in 2018.. He levied large tariffs on chinese imports in an attempt to reduce the trade deficit.

Many in the business community hoped that the trade war would end with the election of president biden, but he has left almost all the trump-era tariffs in place and is seeking new negotiations with the chinese. At the same time, china further tightened his capital controls by cracking down on u.s listed chinese companies. These crackdowns have collectively cost western investors, hundreds of billions of dollars in lost market value according to ray dalio. These events are all symptoms of a growing cold war between the two nations and he fears that this could evolve into a military conflict with catastrophic global consequences.

In this video we'll go over dalio's, take on the worsening us-china relations and try to handicap the probability of a full-blown war in the future ray dalio is the founder and co-chief investment officer of bridgewater associates the world's largest hedge fund, with 140 billion dollars of assets. Under management and dalio himself has a net worth in excess of 20 billion dollars. If you want to become a billionaire like dalio, the easiest way to do this is by starting your own business, but this is easier said than done. How would you even go about thinking of an idea for your new startup? This is where our sponsor trends.co comes in.

Trends.Co is a one-of-a-kind platform which connects you to emerging technology trends and business ideas. Months before they're talked about in the mainstream media. Their analysts come through all the recent developments and industries from social media to e-commerce. They've already outlined 1 000 plus vetted business ideas that you can start in a weekend and they send new ideas straight to your inbox weekly.

But perhaps the most important benefit that you get as a trans member is access to their community of over 16 000 members, which includes entrepreneurs and investors. Many of their members have even found their co-founders on the platform. They have a proven track record of helping their members get their businesses up and running. For example, in 2019 they published a research report about the emerging trend of so-called everything as a service.

One of their members was inspired by their research and started his own third party logistics service, which has since grown to doing over one hundred thousand dollars in annual revenue. And finally, they have virtual business training events and interactive q. A sessions of similar quality to mba lectures, but instead of paying six figures for an mba program, trends.co is partnering with us to offer a special seven-day trial for just one dollar with zero commitment, and you can cancel at any time just go to trends.com wsm link In the description below in a recent interview with cnbc make it dalio outlined his fears about deteriorating political tensions between the us and china. He has spent years studying the economic growth of china and has watched it as it developed from a third world country to the second largest economy in the world.

Today, as china becomes more and more powerful, they'll increasingly challenge the us to be the leading world superpower throughout world history. There has always been one nation that dominates the existing world order for the 18th and 19th century. This was britain, with their vast global empire, with the allied victory in world war ii. America replaced britain as the global superpower as the inventor of the nuclear bomb and the only major country without serious degradation of its capital stock in the 70 years.

Following the allied victory in world war ii, america has built a massive global empire and shaped the world order to its liking. They have hundreds of military bases in over 80 countries and exert significant influence in economic matter, such as international trade, but america's place as a global leader is far from guaranteed throughout history. Whenever there has been a dominant empire, a challenger nation eventually emerges and tries to take the top spot. The conflict between existing superpower and the challenger nation has to be resolved.

Somehow, and sometimes this resolution takes the form of a military conflict. Currently that challenging nation is china. There are five types of wars. Historically, are conflicts, there's a trade war, there's a technology war, there's a geopolitical influence, war, there's a capital war and then there's a military war um the first types of conflicts or wars.

We are in now with china and there's a risk of the military war, so it comes into a richer ricker rich riskier period. Dalio says the u.s is already in something of the cold war with china. The most obvious manifestation of this is the trade war started by former u.s president donald trump. The purpose of this was to decrease the massive trade deficit that the u.s runs with china, which many believe hurts america's domestic manufacturing industry.

Many had hoped that the trade war would be resolved once trump left office, but the biden administration has been just as tough on china as trump was, and they have left in place. Almost all the trump-era tariffs. The anti-china sentiment has become a bipartisan issue in the u.s being perceived as soft on. China is a political death sentence for a candidate on either side of the aisle another type of war that dalio talks about is a technology war.

Since 2010, china has banned u.s tech giants such as google, facebook and twitter from operating in their country. This was partly to maintain their grip on censorship and partly to support the development of domestic tech companies, but in recent years the technology war has escalated with the us also banning chinese companies. In 2020, the trump administration banned u.s companies from supplying components to the massive chinese cell phone and telecommunications company huawei huawei makes equipment used in telecommunications infrastructure trump feared that the chinese government could use huawei as a backdoor to spy on u.s communications trump banned. U.S companies such as intel from exporting semiconductors to huawei huawei relies on u.s chips to power, both their telecom equipment and their smartphones.

The export ban was disastrous for them, and their smartphone market share was cut in half similar to the tariffs. Biden has not reversed these trump era policies and finally, we have the capital war. There are over 250 chinese companies listed on major u.s exchanges. This has led to deepening financial ties between the two countries, but it seems like both countries are now trying to reverse this trend.

In early 2021, the us forced three chinese telecommunications companies to de-list from the new york stock exchange, as they allegedly had connections to the people's liberation army. More recently, the chinese government is effectively forcing the right hailing company didi to de-list from new york and re-list in hong kong and, finally, the sec recently finalized rules that could force all chinese stocks to de-list from the u.s exchanges within the next few years. With all these issues unfolding u.s, china relations are perhaps at their lowest point of any time in the last decade. The question is: can the tensions between the two nations be resolved diplomatically or will they boil over into a military conflict? Unfortunately, dalio isn't too optimistic on this front.

I think in china the main issue with the with china and the united states is the taiwan issue. That's the overarching issue. There are other issues, but i don't think they cause fighting, but there is certainly a competition. Perhaps the most contentious issue between the us and china is the island nation of taiwan.

Taiwan has a population of about 20 million people and is technically called the republic of china after the communist party took control of china in 1949. The previous government fled to taiwan and effectively created a separate country. Taiwan has its own government, its own elected president and for all practical purposes, operates like an independent nation. But china has long maintained that taiwan is still part of china, and president xi has vowed to unify the island with the mainland and with china investing heavily in their own military.

Taiwan warns that they'll be capable of annexing the island by 2025.. A few weeks ago, biden invited taiwan to an international democracy summit, a move that deeply angered beijing. Additionally, u.s troops have been providing training to the taiwanese military. This suggests that the u.s may get involved if china tries a full-scale military invasion and in a further provocation.

U.S warships have started sailing through the taiwan straits. Beijing condemned this as a disruption to regional stability, but why does the u.s care about a relatively small island nation on the other side of the world it all comes down to semiconductors taiwan. Semiconductor is the world's premier manufacturer of leading-edge semiconductors, everything from smartphones to desktops to data centers use chips produced in taiwan. Semiconductor manufacturing is extremely difficult and a lot of the leading-edge production done in taiwan cannot be replicated by u.s companies.

The recent pandemic has exposed how fragile a semiconductor supply chain is given how digitized the economy has become. Having reliable access to computer chips is a strategic priority and could even be considered a national security issue. If china were to annex taiwan and take control of taiwan's semiconductor, this would give them massive economic leverage over the us and the entire world for that matter. This is a risk that the us will certainly be unwilling to accept both the u.s and china have nuclear weapons, and the combined number is enough to destroy the world many times over.

Obviously, this is a worst case scenario and something both sides should aim to avoid. At all costs, but ray dalio is concerned that risk of military conflict are steadily increasing. I think we're risk of a war with china, uh uh, that largely due to misunderstandings, should i be quiet about that, or should i try to help both sides understand what the others are thinking and when i make comments it's like touching the third rail i mean It's not rewarding it's a it's a risky thing to be able to make those comments, because of how incredibly charged that this environment is which worries me. The sound worries me.

So the question is: can we all calm ourselves down not only internally but externally and try to understand each other's positions and so on and get through this without either an internal war or an external war? Dalio says that it's increasingly difficult to have open discussions to resolve the two countries differences, because it has become such a politically divisive issue. He himself has been criticized by many in the media, as they think he speaks too highly of china if you're a political candidate in the us, regardless of what party you're in the last thing you want, is to be perceived as soft on communist china. If you're president xi, the last thing you want is the perception of being a pushover to the american imperialists. This puts both countries in a precarious position, they're forced into playing a high-stakes game of chicken, where neither side wants to be the first to give in.

In the 1990s, the cold war finally ended because the soviet union collapsed under its own weight and dissolved, but china's economy is still growing and they're not going to collapse anytime soon. This means that the two countries will have to come to some sort of a resolution. Eventually, and for the sake of the world, we can all pray that we'll be peaceful. So what does that mean for the stock market? Should you dump all of your stocks in fear of a us-china conflict if we actually do end up with nuclear armageddon, the performance of your robin hood account will be the least of your concerns.

The best thing we can do right now is to go about our daily lives and hope that the politicians will be able to sort things out, alright, guys that wraps it up for this video. What do you think about ray dalio's warnings about us, china conflict? Do you think this is a real risk or is dalio just being paranoid? Let us know in the comments section below, as always. Thank you so much for watching and we'll see in the next one wall, street millennial signing out.