Billionaire Stephen Schwarzman hopes that the fellowship he's endowed at Tsinghua University in Beijing will help future leaders create a bridge between the U.S. and China, that will serve as a "safety net" for the world.
In 2013, Schwarzman donated $100 million to endow the "Schwarzman Scholars" program, inspired by the Rhodes Scholarship, to pay for 200 students to attend a one-year Master's program at Tsinghua University.
The U.S. and China are the two largest economies in the world, accounting for 40% of the world's economic output, making the relationship of those two countries "really key," Schwarzman said in an exclusive sit-down with Yahoo Finance.
He noted that when there's a rising country that's growing faster — in this case, that's China — it can create a "complex readjustment between the No. 1 country, which is the United States, and the closing No. 2."
According to Schwarzman, this can manifest itself in different ways, including "economic competition, geopolitical changes, influence over other countries." And right now, the Sino-American relationship is being dictated by a drawn-out trade war, where both government have imposed billions in tariffs on each other’s goods.
Avoiding a ‘real mess’
The Schwarzman Scholars consist of 40% from the U.S., 20% from China, and 40% from the rest of the world. By living and learning together in China, they "form a cohort that can be comprised of wonderful, talented people" who go back to their own countries, but stay in touch and create "in a way, a safety net for the world."
The China scholarship just one element of the private equity guru’s philanthropic strategy. Last week, Schwarzman committed to donating more than half of this $20.7 billion fortune to charity by signing The Giving Pledge, a movement started by Warren Buffett and Bill and Melinda Gates.
In a letter to Gates, Schwarzman explained that he started the scholarship when he "realized that future leaders needed to be better educated on the economic, political, and cultural factors contributing to China's increasing importance as a global power."
His hope with the Schwarzman Scholars is to make sure populism in the U.S. "didn't create such a difficult situation with China where China would react to that in unanticipated ways."
Among the outcomes, if the readjustment isn't smooth, is the possibility of getting "into a real mess, whether it's militarily, economically,” the billionaire added.
That's why it's "important to make sure that that kind of adjustment is a peaceful one and as cooperative as you can do. And that requires changes on both sides," Schwarzman said.