Xi Jinping warns world is ‘crumbling into disarray’ as 'dangerous' U.S. blockade hits markets. Protect your nest egg now

Laura Grande

Sun, August 2, 2026 at 3:10 PM GMT+3 10 min read

Evan Vucci/ Getty Images XJ01

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Chinese President Xi Jinping issued one of his starkest warnings yet about the state of the global economy in April. While in Beijing, he stated: "The international order is crumbling into disarray (1)."

Xi also criticized the U.S. response to the Iran conflict, calling a naval blockade of the Strait of Hormuz "dangerous and irresponsible" — a move that he argued threatened to further disrupt one of the world's most critical oil shipping routes.

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The comments came as the conflict with Iran continued to reverberate through global markets despite a fragile ceasefire. Since then, geopolitical tensions have broadened beyond the Middle East. The Trump administration's renewed focus on tariffs, including measures affecting China, has added another layer of uncertainty, while Beijing has warned that rising protectionism could weigh on global economic stability.

With oil prices fluctuating wildly — from highs of almost $113 for crude to $68 per barrel — the economic whipsaw is already spreading (2). Furthermore, China's exports beat expectations in July with 27% growth, at least partially driven by a combination of the global appetite for AI and U.S. retailers purchasing product for Black Friday and Christmas, per Reuters (3). Despite this seeming like a good news story, China's Q2 GDP saw its slowest growth in three years with a key concern being a potential dependency on global demand for Chinese goods.

And for investors, the message here extends beyond geopolitics and into portfolio structure.

When major powers, like China, start questioning the global order itself, it can signal a deeper shift: One where the systems underpinning markets begin to fragment.

That narrative has only gained momentum since. While Washington and Beijing have continued talks aimed at managing their relationship, tensions remain over trade, tariffs and national security issues. It's another example of how quickly the relationship between the world's two largest economies can shift — and how those tensions can ripple through global markets.

What happens when global systems come into question?

Periods of geopolitical instability can fundamentally change how economies interact (4). In the case of China and the U.S., the two countries' "punitive economic and financial measures" significantly damaged one another's economies, according to the Economist Intelligence Unit.

Those tensions remain a key source of uncertainty for investors. While the two countries have taken steps to stabilize their economic relationship, disagreements over tariffs, trade, and national security continue to create new risks for global markets.

As supply chains shift (and get disrupted or used as leverage against other countries), trade alliances also fluctuate and policy responses diverge (5). Thus, the global economy becomes more fragmented.

That rupture shows up as cracks in the foundation of the economic relationships on which investors rely. For example, stocks and bonds, which have historically moved in opposite directions, can fall together during inflationary shocks (6).

And so, the markets become harder to predict.

Billionaire investor Ray Dalio has long argued that these kinds of disruptions aren't random, but part of a broader cycle.

"These cycles are continuous and play out in logical ways — and they tend to be self-reinforcing," Dalio wrote in an X post on April 14 (7). He described how economic systems expand, strain and eventually self-correct.

Dalio added, "If an economy turns bad enough, those responsible for running it will make the political and policy changes that are needed — or they will not survive, making room for their replacements to come along."

The traditional portfolio struggles in this environment

Most investors inadvertently build for a more stable, interconnected world. You may have heard of the "classic" 60/40 portfolio of stocks and bonds. For decades, investors relied on the easy-to-trust relationship between those assets to self-balance their portfolios.

Recently, the assumptions about the safety of stocks and bonds have been called into question. In 2008 and 2022, both stocks and bonds posted double-digit losses — the first and second since the 70s — two rare breakdowns of a strategy that had long been considered a cornerstone of diversification (8).

But when inflation rises alongside geopolitical risks, both equities and fixed income come under pressure. When markets are driven more by political decisions than by the economic fundamentals long sworn to, diversification within traditional asset classes doesn't always offer the same protections it once did.

How investors survive

When volatility runs amok, and those traditional correlations break down, some investors might consider looking beyond stocks and bonds.

Alternative assets can behave more favorably during uncertain environments such as these, and help hedge against rapid market movements. According to UBS Asset Management, this is because alternative assets are "designed to perform independently of market directions," potentially reducing drawdowns and accelerating recovery from declines (9).

A store of value

When trust in the global market ebbs, gold is often brought up as a way of preserving wealth. Gold has long been viewed as a hedge during periods of geopolitical stress and inflation, as it isn't tied to any single country's monetary policy because of its intrinsic value (10). Unlike fiat currency, like the U.S. dollar, the precious yellow metal can't be printed at will.

That's one reason gold has remained on many investors' radar. During periods of market uncertainty, some investors turn to the precious metal as a potential way to diversify beyond traditional stocks and bonds.

A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.

Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.

With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.

If you're curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.

This can be a great way to explore adding physical gold to your portfolio as part of a broader diversification strategy. But a good strategy includes more than just one asset.

Real estate exposure, without the market swings

Financial markets can react instantly to geopolitical shocks, but like gold, real estate has its own timeline — one driven more by demand than headlines.

After all, people will always need a place to live.

Rental housing, in particular, can provide a steady income even during periods of wider market volatility. Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.

Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional quality offerings for a fraction of the usual cost.

Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.

For investors with capital on hand, another way to scale even further is to look at multi-family investment opportunities. Like single-family, this vertical can be cumbersome, capital-intensive and full of headaches if you choose to do it all yourself.

But it can also be lucrative. In a report prepared by JPMorgan, Al Brooks — the firm's vice chair of Commercial Banking — said, "I think multifamily housing is absolutely where you want to be as an investor (11)."

Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT's direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

Draw on something different

Or, you can look even further afield.

In 1999, the S&P 500 peaked, and it took 14 long years to recover fully.

Today? Goldman Sachs is forecasting just 3% annual returns from 2024 to 2034. It sounds bleak but not surprising: the S&P is trading at its highest price-to-earnings ratio since the dot-com boom. Vanguard isn't far off, projecting around 5%.

In fact, nearly everything feels priced near all-time highs — equities, gold, crypto, you name it.

That's why billionaires have long carved out a slice of their portfolios in an asset class with low correlation to the market and strong rebound potential: Post-war and contemporary art.

It may sound surprising, but more than 70,000 investors have followed suit since 2019 — through Masterworks. That's because fine art's value is driven up by collector demand and scarcity rather than macroeconomic cycles, which completely separates it from traditional financial markets (12).

Now, you can own fractional shares of works by Banksy, Basquiat, Picasso and more.

Masterworks has sold 31 artworks so far, yielding net annualized returns like 14.6%, 17.6% and 17.8%.

Moneywise readers can get priority access to diversify with art: Skip the waitlist here.

Note that past performance is not indicative of future returns and investing involves risk. See important Regulation A disclosures at Masterworks.com/cd.

The world is changing

Whether Xi's warning proves accurate or not, investors don't need to predict the next geopolitical crisis to recognize that markets are facing a more uncertain backdrop.

If Xi is correct and the world is shifting towards a more fragmented economy, investors may need to rethink their approach to risk — including a 60/40 portfolio devoid of alternative assets.

Periods of instability, despite Dalio's claims of self-correcting, pose more than just challenges for the everyday investor. They also redefine where opportunities lie.

And in a world where the old economic rulebook no longer applies, building a portfolio that can weather impending geopolitical storms matters more than ever.