After 30 years of admiring each other more or less from afar, Ray Dalio and China are coming together. QiaoShui—that’s “bridge” and “water” in Mandarin, obviously enough—is coming to Beijing and for Chinese investors all over the People’s Republic with a Sino-focused QuanTianHou fund (that’s “All Weather” in Mandarin, at least according to Google Translate). And it gets to do so all on its own, without a local firm holding its hand and sharing in the profits, such is the mutual admiration and respect in which Bridgewater and the Chinese leadership hold one another.
Dalio’s forthcoming autobiography/philosophical statement outlines his long fascination with and study of the Middle Kingdom, one which involved sending his 11-year-old son to live there for a year. And you’ve got to admit that there is a certain Eastern philosophical quality to Dalio’s musings, although rather than a Little Red Book, they are to be collected into a Not-So-Little Black Book. Unfortunately, according to those around him, that’s not the only parallel between Ray and Mao.
Some current and former employees say the practice of “radical transparency,” which requires most meetings to be recorded and employees to identify the weaknesses of other employees, reminds them of “struggle sessions” from the Cultural Revolution era, when Chinese citizens were encouraged to publicly criticize and punish one another.
At Bridgewater headquarters, Mr. Dalio created a team he named “the politburo,” a modified version of the ruling Chinese Communist Party’s domineering governing body of the same name.
The hedge-fund firm’s politburo included about two dozen top employees who adjudicated disputes and helped enforce Bridgewater’s rules. The group was recently disbanded.
The Maoism allegedly extends to Bridgewater’s pronouncements on China, which must pass muster before the Paramount Leader before going out into the world in a process that one might be forgiven for thinking is somewhat less than radically transparent and honest.
Mr. Dalio has repeatedly instructed Bridgewater’s hundreds of investment researchers to be careful about writing outright negative outlooks about China, reminding them that he is sanguine about its long-term prospects. He also urged researchers to be aware of how their writing could be perceived if it were leaked outside the hedge-fund firm.
In the first paragraph of a note to investors in July, Mr. Dalio wrote: “We assess the leadership in China to be skilled.” A note to clients Thursday said China is “squeezing the bubble beautifully” as it adjusts its economy.
How sweet. But even Ray’s faith and trust in that leadership has its limits.
When employees return to Westport from a trip to China, they aren’t allowed in the building until they turn over phones and laptops to security officers waiting outside the front door. The electronics are then destroyed because of security concerns.