Jamie Dimon Seems Unfazed About JPMorgan’s Tepid China Business

At times like these, one is reminded of Wile E. Coyote running out into thin air before remembering that gravity exists.

In a brief respite from warning there’s still a risk of a “hard landing” for the US economy, JPMorgan Chase CEO Jamie Dimon told attendees of the bank’s conference in Shanghai on Thursday that parts of the company’s business in China had “fallen off a cliff” in the past few years. But he also seems to be just brushing it off his shoulder, saying that other businesses, like asset management, “should hopefully grow over time.”

Business in Beijing

The US-China trade war, full of tit-for-tat tariffs, has affected everything from microchips and miniskirts to car parts and soybeans. So it’s no surprise that Wall Street is also facing its own trials and tribulations, especially as both Beijing and Washington ramp up scrutiny on Western firms’ presence in the Middle Kingdom. 

Competition with China’s domestic companies is always going to be a major hurdle for outsiders. For example, Apple is still one of the biggest phone vendors in the country, but its market share is getting squeezed by the likes of Honor, Huawei, and Vivo. When it comes to investment banking, the in-house rivals are Citic and China International Capital Corp. However, they’ve also been hit by China’s stagnating economy, which is experiencing deflation, massive local government debt, and a shrinking working-age population:

• Investment banking activity has been slowing overall in China. Though expected to rebound in 2024, dealmaking steadily declined over the past four years. In 2023, the number of mergers and acquisitions fell to 2,574, and their aggregate transaction value dropped to 1.28 trillion yuan, the lowest since 2018, according to an S&P Global analysis. 
• Also, initial public offerings have raised only 60 billion yuan, or roughly $8.3 billion, so far in 2024, an 85% plunge year-over-year, according to Dealogic data reported by the Financial Times.

Can Take it or Leave it: Dimon told those in Shanghai that JPMorgan will “just keep on investing in whatever country we’re in,” according to the FT, but China may not be the crucial market like it is for Apple or Tesla. Just last fall, Dimon said the firm would exit the nation altogether if the US government ordered it to. Meanwhile, analysts at JPMorgan Private Bank remain bearish on the Chinese economy, citing Beijing’s focus on security and self-reliance over growth and economic reforms. In its latest quarter, JPMorgan reported that its total exposure in China was $14 billion. That’s definitely a nice chunk of change, but it’s paltry compared to the $77 billion in the UK or roughly $96 billion in Germany.