JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon quipped that his bank is likely to outlast China’s Communist Party, while reiterating his company’s commitment to the country in wide-ranging comments that touched on Taiwan, free speech and Donald Trump.
“We hope to be there for a long time,” Dimon said of China while speaking Tuesday at a panel discussion at the Boston College Chief Executives Club. He relayed a “joke” he made during a recent visit to Hong Kong: “The Communist Party is celebrating its 100th year. So is JPMorgan. And I’ll make you a bet we last longer.”
JPMorgan has been operating in China since 1921, the same year the Communist Party was founded there. Dimon said he wouldn’t be able to joke about outlasting the party if he were in China, but added that officials there were probably listening to his remarks in Boston anyway.
Dimon, one of the longest serving and most outspoken CEOs on Wall Street, also said he doesn’t know anyone who “thinks that something’s gonna go wrong in Taiwan,” saying the current tensions amounted to “saber rattling.” He warned that a Chinese intervention in Taiwan “could be their Vietnam.”
‘Body Bags’
“Body bags in any country have an adverse effect at one point, particularly when the objective may be irrelevant,” Dimon said. “And so I think people will be very careful about what they’re going to do, and I think it would be very painful for the Chinese to do it.”
“But they’re very smart people,” he added. “Hopefully that will not become an issue.”
China has a history of taking action against companies and individuals that appear to challenge its policies, particularly on sensitive issues like the Communist Party’s legitimacy or Taiwan. In 2019, UBS Group AG came under pressure to fire its chief economist, Paul Donovan, after he made a comment about a “Chinese pig” in a note about rising consumer prices. He later apologized, saying it was “innocently intended.”
Free Speech
Dimon spoke about the lack of free speech in China and now Hong Kong, while saying that authorities in Beijing shouldn’t seek to silence executives outside of the country. Two years ago, JPMorgan told some staff to ensure that they don’t refer to Hong Kong, Macau or self-governing Taiwan as separate countries.
“If they start to tell you what you can say here, because you do business in China, that’s a problem,” he said. “They haven’t done it. They’re very smart, they’re very thoughtful.”
The U.S. business community should’ve taken issues related to China more seriously a decade ago, Dimon said, citing trade tensions and the crackdown in Hong Kong. He said business groups resisted former President Barack Obama’s proposals to get tougher on China and then embraced Trump’s moves “because it was time to do something about it.”
Obama, Trump, Biden
Dimon said Trump “wasn’t wrong” about the World Trade Organization, NATO and China, while adding that he detests a lot of what the former president said and wouldn’t have done things the same way. He defended the JPMorgan’s presence in China, saying the U.S.’s biggest bank can’t go in and out of countries every time it doesn’t like its policies and also has a presence in Russia, Pakistan and Egypt.
“But we need leadership,” Dimon said. “And I’m hoping the Biden administration provides it.”
Dimon also touched on the U.S.’s competitiveness against China, noting that per capita gross domestic product in America is about four times higher and “our demographics are better.”
“If you opened up the doors of America, a billion people come here,” Dimon said. “If you open the doors of China, how many people do you think would go there? And so people should be a little careful when they think that China is ascendant that way.”
China Venture
Earlier this year, JPMorgan won approval from Chinese regulators to fully own its China securities venture—a sign that U.S. financial firms are forging ahead with plans to expand in the country despite tensions between the world’s two largest economies.
The bank’s total exposure to China rose 10.4% to $21.2 billion as of Dec. 2020, driven by trading and investing, which includes market-making inventory and securities. JPMorgan’s China securities venture was ranked last by assets as well as revenue in 2019 among 98 firms tracked by Securities Association of China. The Shanghai-based entity posted a loss of 85.9 million yuan in 2019, the association’s data showed.
Dimon has called China one of the biggest opportunities in the world for JPMorgan. He visited Hong Kong last week after being granted an exemption from the city’s COVID rules, saying after he arrived that he was “not swayed by geopolitical winds.”
In the wide-ranging interview, Dimon also said:
- While it’s “too late now” for him to get into politics, he might have considered that route 10 years ago had he known what the political situation was going to be like.
- Blockchain technology is “real” and useful for some banking tasks, but it takes too long and is too expensive for others. Tokens, on the other hand, have no intrinsic value, he said. “Buyer beware,” Dimon said, echoing his longstanding skepticism about cryptocurrencies.
- U.S. policy is critical for the rest of the world to solve its problems, including climate change. But “if America is discombobulated,” the result will be global chaos.
