Ray Dalio says China is overdue in reducing its debt

Legendary investor Ray Dalio, a big enthusiast and investor in China, said on Thursday the world's second largest economy is overdue in conducting a "big debt restructuring."

"As for the debt and the economy, there is an obvious need for a big debt restructuring of the sort that Zhu Rongji engineered in the late 1990s, just much bigger," Dalio wrote in a LinkedIn post, referring to the former Chinese premier who reformed lumbering state-owned enterprises and laid off millions. "China is overdue in doing it."

Dalio said deleveraging is never an easy task, but in the case of China it can be more manageable because most of its debt is in domestic currency and is held by its citizens.

"It needs to follow this beautiful deleveraging process now because the debt-burdened balance sheets and burdensome debt service payments are freezing the economy, especially at the provincial level and most especially in some of the poorest provinces," Dalio said.