The Wall Street Journal sreports that the hedge fund received Chinese government approval for a venture that will raise billions of dollars to invest and sell assets in the country.
The report said the firm also received permission to trade directly on the local Chinese exchanges. Bridgewater already counts the China Investment Corp., the country's sovereign wealth fund and the State Administration of Foreign Exchange, as clients, according to the Journal.
The new China fund's strategy will be similar to one of Bridgewater's key hedge funds.
"It is being created in the mold of Bridgewater's low-fee All Weather portfolio, which follows a 'risk parity' strategy and uses computer-driven bets," the Journal said.
Risk parity is an investment strategy that dynamically adjusts portfolio allocations to stocks, bonds and commodities based on the respective volatility of the asset classes. It often uses leverage to amplify returns.
The firm's founder, Ray Dalio, recently wrote in a LinkedIn blog post that "risks are now rising" in the market and recommended gold as a hedge. He cited increasing geopolitical tensions between the U.S. and North Korea.
Bridgewater is the world's largest hedge fund, managing about $160 billion, according to its website. The firm did not immediately respond to a request for comment.