Ray Dalio, founder and co-CIO of Bridgewater Associates, does not expect widespread financial contagion from the developing debt crisis at Chinese property giant Evergrande, saying Tuesday that the situation is "manageable" for the Beijing government.
Speaking to Bloomberg TV, Dalio also predicted another round of quantitative easing from the Federal Reserve down the road.
The Bridgewater founder said the Fed will taper its current asset-purchase program but will be forced to begin a new round at some point in the future.
"That's the nature of the beast," he said, noting that the central bank has set a historic precedent of lower interest rates and more aggressive QE programs over time.
Dalio's interview came amid an appearance at the Greenwich Economic Forum.
At the event, Dalio expounded on his Fed prediction, saying that a minor rate hike was possible.
He added that even a small rise in rates could have significant effect on asset prices. As such, he thinks a rate hike will produce a correction.
On the Evergrande situation, Dalio told Bloomberg that Chinese authorities will likely let some lenders get "stung" by the upcoming default before they step in.
He believes the Chinese government has a plan to deal with the default crisis because authorities knew the problem was coming.
"If your debt is in your own currency, you can work it out," he said.
Commenting on Chinese investments in general, Dalio said investors have to accept that the Beijing government sets the rules. He also argued that China should be seen as a long-term strategic play, not an investment to "jump in and out of."