The tension between the US and China has changed the global order, warns Jamie Dimon

Tensions between the US and China have changed the international order, making it more complicated for businesses to manage than 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 faltering, Dimon also argued that “uncertainty” about Beijing’s policies would hurt investor confidence.

“Hopefully we can resolve all these differences, you know, with China and America and what it does with other allies, relationships and things like that,”[ads1]; he said in closed-door comments at a JPMorgan conference in Shanghai.

“We haven’t really had that [complexity] actually since World War II. . . I wouldn’t even put the Cold War in that category, he added, according to an audio recording of the incident.

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 rattled regional stock markets amid worsening relations with the United States.

“If you have more uncertainty, something caused by the Chinese government . . . it’s not just going to change foreign direct investment,” Dimon told Bloomberg TV, in response to questions about China’s Covid-19 policy and its crackdown on consultants and technology sector. “It’s going to change the people here, their own confidence.”

China is struggling to revive economic growth, as Wednesday’s figures highlighted, after abandoning its zero-Covid policy at the end of last year.

The official manufacturing purchasing managers’ index fell to 48.8 for May, compared with 49.2 in April, according to the National Bureau of Statistics.

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The data drove Hong Kong’s Hang Seng China Enterprises index, which tracks large mainland companies, down nearly 2 percent on Wednesday, taking the benchmark more than 20 percent below its January peak and into a bear market.

The renminbi fell 0.5 percent to Rmb7.1128 against the dollar, down about 3 percent so far this year.

Economists said that if the PMI stayed below 50 for several months, indicating a contraction, the government would consider stimulus policies.

China’s economy grew rapidly in the first quarter, but the recovery has since begun to falter. High hopes for the reopening of business have been undermined by a lack of investor confidence and geopolitical tensions after the United States shot down a suspected Chinese spy balloon and increased sanctions on semiconductors.

Beijing has also raided foreign groups such as Bain & Company, Capvision and due-diligence group Mintz, and stepped up regulation of domestic private players, including technology companies and education firms.

Property investment, credit and industrial profits have declined, while indicators such as retail sales have fallen below analysts’ expectations, casting doubt on the government’s full-year growth target of 5 percent.

FDI in China, measured by one of the Commerce Ministry’s key benchmarks, rose 2.2 percent in the first four months of 2023 to just under Rmb500 billion, although in USD terms it fell 3.3 percent to US$73.5 billion.

At the JPMorgan conference, Dimon said that while he sometimes complained about regulators in the bank’s home market, the US system had a “positive side”.

“Transparency, investor protection, the rule of law, the ability to do business in large markets and to have proper corrupt practices – that’s actually good for a country. It is good for the financial markets. It is good for the 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.

JPMorgan has invested significantly in the mainland, where the government has given foreign businesses greater flexibility to set up their own finance companies as part of a push to develop the largely closed financial system. In 2018, Dimon said in Beijing that “we are building here for 100 years”.

The bank’s Shanghai conference, which included speeches from Henry Kissinger and Baidu CEO Robin Li, attracted around 3,000 attendees. It was largely closed to the media.

Additional reporting by William Langley, Andy Lin and Hudson Lockett in Hong Kong

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