On October 19, “Future is Here: Global Leaders on the Changing World” lecture series, organized by Tsinghua PBC School of Finance (PBCSF) and National Institute of Financial Research (NIFR) at Tsinghua University, held a talk on “Global Economy/ Market Outlook and Debt Cycles”. The founder of Bridgewater Associates, Ray Dalio, who was invited by Dr. Min Zhu, Chair of NIFR at Tsinghua University and former Deputy Managing Director of IMF, delivered a keynote speech to the faculty and students of Tsinghua.
Ray Dalio started Bridgewater Associates in 1975 and built it into the largest hedge fund in the world. Given his influence on economic policymaking, he was referred to as the “Steve Jobs of Investing” by foreign media and appeared on “Time 100”, an annual list of the 100 most influential people in the world.
During the talk, Ray Dalio stated that as the economic machine runs, two types of cycles are bound to appear: short-term debt cycle and long-term debt cycle. The short-term debt cycle, a business cycle in nature, usually lasts for 8 to 10 years, during which monetary policies and other instruments are used for periodic adjustments. The long-term debt cycle, however, will continue for a much longer period, even hundreds of years. In addition to productivity, the long-term debt cycle is resulted from the interaction of political, economic, and social factors. Ray Dalio divided the debt cycle into seven phases, namely, the early part of the cycle, the bubble, the top, the “Depression”, the “Beautiful Deleveraging”, “Pushing on a String”, and normalization.
In his dialogue with Dr. Min Zhu, Ray Dalio elaborated on his analysis of China’s big challenges and his understanding of the trade tension between China and the United States. Dalio expressed that since the reform and opening up, China has achieved economic and social miracles, which are attributed to China's firm push for reform, orderly development and national responsibility. The Chinese economy is facing many deterrents, such as debt restructuring, capital markets restructuring, economic restructuring, balance of payments, geopolitical turmoil, etc. According to Dalio, China is capable of coping with these challenges and crises. In his view, the trade disputes between China and the United States are essentially a competition in strength between the two countries. For China, sustaining stability and unity outweighs anything else.
Dialogue between Ray Dalio and Dr. Min Zhu
In the Q&A session, Ray Dalio shared some unique insights on life and personal values with respect to financial career development, lifelong learning, and intellectual training.
Dr. Min Zhu summarized the talk: Firstly, in terms of debt cycles, history is constantly repeating itself. Some rules, mechanisms, and forces will lead to identical historic recurrences. Only the ability to learn from the past can help people cope with the future. Secondly, for the current development of China, stability and unity are of paramount importance. Lastly, Dr. Min Zhu drew on Ray Dalio’s personal experience to encourage Tsinghua faculty and students to “know yourself”, uphold lifelong learning and take actions decisively.
The “Future is Here: Global Leaders on the Changing World” lecture series invites world-renowned leaders from economic, financial, social and academic circles to project and contemplate on global development trends, with the aim of building a first-class exchange platform for Tsinghua students, faculty and alumni and helping them grasp the latest trends and develop the habits of lifelong learning.
Past guest speakers include Maurice Obstfeld, Economic Counsellor and Research Department Director of IMF, Peter Maurer, President of the International Committee of the Red Cross (ICRC), and Harvey Schwartz, former President and COO of Goldman Sach. In November, Jacob Frenkel, Chairman of JPMorgan Chase International, Douglas Peterson, CEO of S&P Global, and Masahiko Uotani, CEO of Shiseido will visit Tsinghua and deliver speeches as part of the “Future is Here: Global Leaders on the Changing World” lecture series.