In a stark warning, Citadel CEO Ken Griffin has cautioned that a rupture between Taiwan and China could plunge the U.S. into a great depression, with catastrophic consequences for the Chinese and American economies.

Speaking at the MFA Network Miami Conference, the hedge fund manager, entrepreneur, and investor sounded the alarm by stating that the escalating tensions between the U.S. and China pose a more significant threat than China’s slowing GDP growth.

“Both countries are significant trade partners and vital to the global growth story. It is imperative that we maintain a constructive tone in our relationship,” Griffin stressed.

He expressed concern about Taiwan’s recent election of Lai Ching-te, a pro-independence advocate, and emphasized the need for China to handle the situation with prudence. Griffin highlighted the potential repercussions, questioning the continuity of crucial operations such as Tesla’s car production if the U.S. were to lose access to Taiwanese semiconductors.

Estimates suggest that GDP could plummet by 8-10% if peace in the region is not upheld, further underscoring the critical importance to U.S. national security, Griffin asserted.

Citadel Securities, under Griffin’s leadership, has been actively expanding its footprint in China. The company has pursued opportunities in the Chinese market, including bidding for Credit Suisse’s business and securing licenses to potentially become the first foreign market maker in China.

In a strategic move, Citadel recently made a non-binding offer for Credit Suisse’s securities ventures in China. The potential market-making sector in China could yield substantial revenues, with predictions of reaching $34 billion by 2032, a significant leap from about $6 billion last year, as reported by Chinese brokerage Haitong.

Griffin drew attention to the sheer size and influence of the Chinese economy, stressing the country’s competitive edge in terms of population and STEM graduates. He emphasized China’s lead in renewable energy sources and EVs, raising thought-provoking questions about the American consumer’s reliance on Chinese vehicles.