Dalio explores the evolving relationship between the US and China, which has moved from cooperation to confrontation in recent years. The US and China developed a close economic relationship in the 1980s-2000s, with the US providing a market for cheap Chinese exports while China recycled its surpluses into US debt securities. But many in the US saw this as unfair.
Under Xi Jinping, China has become more assertive in challenging the US-led global order. US leaders have identified China as the top threat to American primacy. A bipartisan consensus has emerged in favor of "getting tough" with Beijing.
The two powers are now engaged in a multi-front struggle encompassing trade, technology, finance, and geopolitics. The US has imposed tariffs on China, sanctioned Chinese tech champions, and sought to limit China's access to the dollar system. China has responded with its own restrictions. Taiwan remains the most dangerous flashpoint, as China views the island as a core interest while the US maintains a policy of "strategic ambiguity" over whether it would defend Taiwan militarily.
Section: 2, Chapter: 13
