Tensions between the US and China have upended the international order, making it more complex for the economy than it was during the Cold War, JPMorgan CEO Jamie Dimon has warned.
On a day when manufacturing data showed the recovery in the world’s second-largest economy was stalling, Dimon also argued that “uncertainty” over Beijing’s policies was hurting investor confidence.
“Hopefully we can sort out all these differences between China and America and what they’re doing with other allies, relationships and things like that,” he said behind closed doors at a JPMorgan conference in Shanghai.
“We haven’t really had that yet [complexity] really since World War II. . . I wouldn’t even put the Cold War in that category,” he added, according to an audio recording of the event.
JP Morgan did not immediately comment.
Dimon’s comments during his first visit to mainland China in four years came as a slowdown in Chinese factory activity cast doubt on the country’s growth prospects and rocked regional stock markets amid deteriorating relations with the US.
“If you have more uncertainty, it is partly caused by the Chinese government. . . It will not only transform foreign direct investment,” Dimon told Bloomberg TV in response to questions about China’s Covid-19 policy and its crackdown on advisors and the tech sector. “It will change the people here, their own self-confidence.”
As figures on Wednesday showed, China is struggling to revive economic growth after abandoning its zero-Covid policy late last year.
According to the National Bureau of Statistics, the official manufacturing PMI fell to 48.8 in May, down from 49.2 in April.
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The data drove Hong Kong’s Hang Seng China Enterprises Index, which tracks large mainland companies, down almost 2 percent on Wednesday, taking the benchmark more than 20 percent from its January high and entering a bear market.
The renminbi slipped 0.5 percent against the dollar to Rmb7.1128, down about 3 percent year-to-date.
Economists said if the purchasing managers’ index stayed below 50 for several months, suggesting a decline, the government would consider stimulus measures.
China’s economy grew quickly in the first quarter, but the recovery has stalled since then. High hopes of business reopening were eroded by a lack of investor confidence and geopolitical tensions after the US shot down a suspected Chinese spy balloon and tightened sanctions on semiconductors.
Beijing has also cracked down on foreign corporations such as Bain & Company, Capvision and due diligence firm Mintz, and tightened regulation of domestic private sector actors, including tech companies and education firms.
Property investment, credit and industrial profits have all declined, while indicators such as retail sales fell short of analysts’ expectations, casting doubt on the government’s 5 percent growth target for the full year.
Foreign direct investment in China, measured by one of the Ministry of Commerce’s key benchmarks, rose 2.2 percent to nearly RMB500 billion in the first four months of 2023, although in USD terms it rose 3.3 percent to US$73.5 billion -dollars declined.
At the JPMorgan conference, Dimon said that while he sometimes complained about regulators in the bank’s home market, there is a “positive side” to the US system.
“Transparency, investor protection, the rule of law, the ability to do business in big markets and having proper anti-corruption laws – that’s actually good for a country. This is good for the financial markets. It’s good for capital,” he said.
Dimon’s visit to Shanghai is one of several high-profile trips by foreign leaders as China reopens. Tesla CEO Elon Musk flew to Beijing this week and met with Foreign Minister Qin Gang.
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JPMorgan has invested heavily on the mainland, where the government has allowed foreign companies more flexibility to set up their own financial companies to further develop the largely closed financial system. In 2018, Dimon said in Beijing that “we’ll be building here for 100 years.”
The bank’s Shanghai conference, which also included speeches from Henry Kissinger and Baidu CEO Robin Li, drew around 3,000 participants. It remained largely closed to the media.
Additional reporting by William Langley, Andy Lin and Hudson Lockett in Hong Kong