Bridgewater Associates founder Ray Dalio said a small part of his family office’s portfolio remains invested in China, but pointed out that there are “real issues” in the country amid a deepening economic slowdown.

“You have an environment in China which is changing and becoming a more difficult environment,” Dalio said in an interview with Bloomberg Television on Wednesday. The world’s second-largest economy has changed in the last four years and with its property and equity markets declining, many Chinese prefer holding on to cash, he added.

China’s industrial output marked its longest slowing streak since 2021 in August, with consumption and investment weakening more than expected, based on data published Saturday. That’s putting more pressure on Chinese authorities to quickly ramp up fiscal and monetary stimulus to hit this year’s growth target of around 5%.

“There’s a small percentage of our portfolio which is in China and we’ll stay in China through this process,” Dalio said on the sidelines of the Milken Institute Asia Summit 2024. China remains a “very attractively priced place” to invest in, but the question is the size of the investment and how it’s structured, he said.

But he said China needs a restructuring amid challenges partly created by its property sector, that’s placed it in “a situation that’s more challenging than Japan in 1990”.

China’s economic weakness is a major test for President Xi Jinping as he balances growth with avoiding a big stimulus that fuelled previous boom-and-bust cycles.

Still, Dalio said investors should be aware that all countries go through ups and downs and “in no country should you invest so much money that it becomes a dominant portion of your portfolio”. 

  - Bloomberg