Seeing through each other's eyes is key

I am very humbled to be here.

We all have our own perspective and opinions on China. I can't say what the right opinions are. I can only share the perspective I've gained over the last 30 years of going to China and forming meaningful relationships.

In 1984 I was lucky to go to China as a guest of CITIC, which was the only company that could deal with the outside world at the time. As a gift, I would bring US$10 calculators to people who ran companies and they thought they were miraculous machines.

I remember giving a lecture to teach about the financial markets on the 10th floor of the chocolate building and there were all the hutongs down there.

In the chaos down below, I could see the promise of China. I sensed there would be an opening-up of China and so I looked at the hutongs and said the world was going to change.

I was told, "No, you don't know China." I said, "Ok, I don't know." But I knew there was globalization happening.

Since then, China's income levels have increased by 26 times, its share of world GDP went from 2 percent to 22 percent. Its poverty rate went from over 88 percent to less than 1 percent. Its life expectancy increased by 10 years. There's no greater miracle than what has happened in China.

I have been in a fortunate position to know the Chinese people. Many people have become lifelong friends. Through my experiences and my friendships, I have gained great perspective on the differences between the American and Chinese ways of seeing things. .

One Chinese leader described to me that in essence, the difference is that the United States is a country of individuals and individualism. It treasures the revolutionary individuals - the Steve Jobs' type of personality who will disrupt the system. In China, it is the family and the collective. He described that the word, country, consists of two characters: state and family. There is a top-down system in China. This difference in core values and perspective gets reflected in some of the conflicts we see.

The issue is the ability to see things through each other's eyes. I have been very lucky to be dealing with economic policymakers so that I could see things through their eyes. Of course, economics has also shifted to geopolitics, and by being able to see things through the eyes of the Chinese, I would say that by and large, I would be implementing the same sort of economic policies that they have in going through a time of debt adjustment and managing that.

Sometimes it seems that when you do healthy things in constraining the debt, it is a lot less fun and a lot more painful than when you have a great time getting into debt, so there are these types of adjustments that are being made.

My responsibility is a global economic investor. As a global economic investor, I try to find the elements that make countries succeed and fail over time. That led me to develop indicators that can be quantified.

In my study of why reserve currencies and the countries behind them have risen and declined, my research team and I have been able to look through long arcs of time. Currently the US has the existing world's reserve currency. Before that it was the British Empire. Before that, it was the Dutch Empire. These arcs take place over long periods of time - a hundred, two hundred years. Many of those we can't see but they take us by surprise like the changes in the reserve currency. I will describe the indicators behind the rise and fall of nations in brief.

Education and civility are the first indicators. The better the education, the more civility of the behavior of people together. Infrastructure is the next indicator, and then technology and the invention of new technologies. Technology is not only a commercial asset, it is a military asset. The capacity to build technology is a leading indicator of a country gaining strength.

For example, when the Dutch invented ships that could go all around the world, they carried guns which were necessary for all the fighting in Europe. Because of their capacity to build technology, they were able to account for half of world trade. As a result, you get improvements in output, GDP rises and then you have larger and larger shares of world trade. It's a reflection of the competitiveness of how that arises over a period of time because you grow, because you're competitive and you raise those living standards. And as you go global, it's the development of the military because you need the military to both protect your trade routes and also to protect the natural resources.

You also have the development of a financial system, and with that there's the development of a reserve currency because it is the medium by which there is a common currency and a common exchange rate. When that exists, it also means that those countries can get deeper into debt because everyone wants to save in the currency and you lend the currency and then they get deeper in debt. The economies get overextended and that is the short history of the rises and declines of empires. With that, there's a certain destiny that happens as a result.

China was, for most of its history, the most important or one of the most important empires in the world. Far ahead of Europe, it invented the printing press 500 years ahead of others, to name one thing. This is a result of their Confucian approach and the way they operate. There are things that make Americans American and there are things that make Chinese Chinese. And we can't ever expect that we're going to make the Chinese like Americans and to adopt our system any more than they should expect that Americans should be made like Chinese. Because of this, there is competition.

I have great admiration for the Chinese and their system, which is different from the American system. But with that there are wars, or as I'd prefer to call it negotiations. There is a trade war, there is a technology war, there is a geopolitical war and there could be capital wars. And that's the nature of the environment, and how that is approached is going to determine what our futures are like.

I honestly don't know how it will be approached. There is a certain destiny to argue about those things and not a global world legal system that gets us through those things. So when I look at it, I hope that it is done with mutual understanding so that instead of wars which mean lose-lose relationships, we approach this with win-win relationships by seeing each other through each other's eyes and not expecting the others to be like us in all respects.

The author is an American billionaire investor and the founder of Bridgewater Associates. The opinions expressed here are those of the writer and do not represent the views of China Daily and China Daily website.