Bridgewater CEO Clashes With Dalio Over China Before Senate Race

(Bloomberg) -- Bridgewater Associates Chief Executive Officer David McCormick, who is considering a U.S. Senate run, made it clear he disagrees with Ray Dalio’s politically unpopular defenses of China.

On a company call, McCormick addressed controversial remarks that Dalio had made this week on television, in which the hedge fund’s legendary founder compared China to a “strict parent” when asked about the disappearance of its citizens who get in trouble. 

McCormick told staff he’s had lots of arguments about China over the years with Dalio and that he disagrees with the billionaire’s views, according to people with knowledge of the matter.

The Thursday call was set up for McCormick to address press reports that he may leave to enter Pennsylvania’s 2022 Senate race as a Republican candidate. He promised to reveal his plans in coming weeks. A hawkish stance on China is all but essential in GOP politics if McCormick makes a run. 

Bridgewater has been expanding in China, and McCormick would undoubtedly have to navigate China-bashing in the Rust Belt state if he pursues the Senate seat held by Republican Pat Toomey, who’s retiring. Celebrity physician Mehmet Oz, who hosts the “Dr. Oz” show, already announced that he’s entering next year’s Republican primary and pledged to “get tough on China” as part of a platform to create more U.S. jobs.

In November, Bridgewater raised 8 billion yuan ($1.3 billion) for a new private fund in China. That brought the firm’s total onshore assets under management to more than 10 billion yuan, people familiar with the matter have said.

A spokesman for the company declined to comment. 

Contacting Youngkin

McCormick, 56, is moving to a new home in the Pittsburgh area shortly, the people said, asking not to be identified discussing confidential talks. That’s the most concrete sign yet that he’s likely to leave the world’s largest hedge fund manager to enter politics in Pennsylvania, where he grew up.

He recently reached out to former Carlyle Group Inc. co-CEO Glenn Youngkin following his victory last month in the Virginia governor’s race, according to people familiar with their talks. McCormick could follow the playbook used by Youngkin, who pitched himself as savvy business builder and job creator. 

“He’s getting closer and closer to a run,” said Jim Schultz, a former lawyer in the Trump administration who has been encouraging McCormick to seek the Republican nomination. Schultz described the executive as a “hawk” on China. “He has dealt with China in the past, he knows how to talk to them, and he will be tough on China as a U.S. senator.” 

McCormick was involved in negotiating with China over technology during his stint as a U.S. Treasury undersecretary in George W. Bush’s administration. “The president of China complained about the decisions he was making about technology at the time,” Schultz said. “He views China as an existential threat to our country.”

McCormick graduated from West Point and served in the Army. In addition to his time at Treasury, his previous jobs included time as a management consultant at McKinsey & Co. Dina Powell, his wife, worked in the Trump White House as deputy national security adviser before returning to Goldman Sachs Group Inc. 

During Dalio’s interview this week on CNBC, the Bridgewater founder was asked about squaring his bullishness on China investments with human rights issues, including “disappearing people.”

“Should I not invest in the United States” because of its own human rights issues and other reasons, Dalio asked. “As a top-down country,” he said of China, “they behave like a strict parent.” 

“The notion of whatever they are doing in terms of hauling in people and then behaving in a certain way, that’s their approach,” Dalio added. “If I evaluated all approaches around the world, in all countries, I’d be in a bind to try to find out where do I invest.”

Republican Senator Mitt Romney criticized the remarks, with the Utah lawmaker accusing him of showing “feigned ignorance of China’s horrific abuses.” 

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