By Alex Callinicos
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Why a top banker said sorry to China

Issue 2783
JPMorgan Chase chief executive Jamie Dimon sat in a chair

JPMorgan Chase chief executive Jamie Dimon (Credit: Flickr/ World Economic Forum)

It’s not often that Jamie Dimon gets humbled. He’s chief executive of the giant investment bank JPMorgan Chase—the biggest bank in the United States.

JPMorgan’s roots go deep in the history of US capitalism. John Pierpont Morgan in the late 19th and early 20th centuries marshalled the creation of industrial giants such as US Steel. He orchestrated the rescue of the US financial system from the crisis of 1907. JP Morgan partner Thomas Lamont was a major international power broker when the European states became dependent on US loans during and after the First World War.

Dimon doesn’t wield the same kind of political influence, although he steered the bank through the global financial crisis of 2007-8. Since then JPMorgan Chase—the product of multiple bank mergers—has done significantly better than Goldman Sachs, the other historical giant of Wall Street.

But last week Dimon slipped. He told a business forum in Boston, “I made a joke the other day that the Communist Party [of China] is celebrating its 100th year. So is JPMorgan. I’ll make a bet that we last longer. I can’t say that in China. They are probably listening anyway.” 

The next day Dimon, who had just been the first Wall Street boss to visit Hong Kong since the onset of the pandemic, twice abjectly apologised. This points to one of the striking things about the growing antagonism between China and the US. 

Despite the geopolitical tensions between the two biggest economies in the world, Wall Street is desperate to get more access to Chinese markets.

Financial Times columnist Rana Foroohar asked recently, “Am I the only one amazed by the juxtaposition of China testing hypersonic weapons and Nato’s new mission to fend off the Middle Kingdom, with Goldman Sachs joining JPMorgan as the second independent bank to be allowed to operate freely in China without a local partner?”

These mammoth banks have their eyes fixed on the wealth generated by China’s generation-long boom. Goldman’s estimates that Chinese households will have £52 trillion of assets by 2030. Global output is about £63 trillion.

Several big Western banks, with JPMorgan and Goldman in the lead, are eager to offer Chinese capitalists their wealth management services and expertise in mergers and acquisitions. But the path to mega-profits is proving rocky. Of the seven global banks with investment banking operations in the People’s Republic of China, only three have made a profit in the past three years.

The Chinese market is indeed huge. But there are already well-entrenched domestic banks and outsiders find it hard to understand the rules of the local game. JPMorgan and its ilk hoped they could make up for these disadvantages by helping Chinese companies list their shares outside mainland China.

Yet in July the Chinese government started clamping down on these foreign share launches. 

This was partly a reaction to the demand by US securities regulators that Chinese companies listing on Wall Street supply the results of their audits.

China passed a Data Security Law requiring its companies to get government approval before supplying any information to foreign state agencies.

It dramatized the shift by wrecking the Wall Street launch of Didi, the Chinese equivalent of Uber. This followed Chinese regulators blocking an ever bigger share launch by the tech giant Alibaba in November 2020.

The Chinese government also worries about losing political control over private capital. Alibaba boss Jack Ma was getting too big for his boots. In a major speech in October 2020 he attacked China’s state banks for their “pawnshop mentality”. 

So, on the one hand, the internationalisation of capital has dominated the past few decades. Chinese companies are going global and banks like JPMorgan and Goldman Sachs are eager to help them. 

On the other hand, the growing antagonism between the US and China is leading both states more tightly to monitor and control the interactions between their economies. 

No wonder then that even the mighty Jamie Dimon was scared of offending the Communist Party.

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