Jpmorgan saw Dimon backlash coming
Firm rallied experts in wake of China joke
Jpmorgan Chase & Co. chief Jamie Dimon knew as soon as the words came out of his mouth that the joke about China could land him in hot water.
“I was just in Hong Kong, I made a joke that the Communist Party is celebrating its 100th year. So is Jpmorgan. And I’ll make you a bet we last longer,” he said on Tuesday at a Boston event. Then he added: “I can’t say that in China. They probably are listening anyway.”
Dimon, no stranger to brashness, also knew the bank would have to engineer a hasty retreat. Soon, members of the firm’s government-relations team and China offices were corralled to discuss the remarks and decide whether to acknowledge them or let them lie. Some 18 hours later, when it became clear that the comments attracted global attention, Dimon issued a statement of regret.
“Hundreds of individuals, companies and organizations have apologized for hurting the feelings of the Chinese Communist Party,” said Isaac Stone Fish, founder of Strategy Risks, which specializes in corporate relationships with China. The way Dimon said that he regrets his comment “is a smarter way to do it.”
Dimon’s remarks, made during a visit to the Boston College Chief Executives Club, follow a slew of domestic and international trips as Jpmorgan’s chief executive continues to tout a U.S. economic boom that’s also put him at the front of Wall Street’s return-to-office push. But his recent travel efforts have been somewhat problematic — the quarantine exemption he earned for his Hong Kong visit, a dispensation also afforded to actress Nicole Kidman, garnered much local criticism.
Now he’s having to downplay his Boston comments — and it’s not the first time. Dimon has a history of provocative remarks that he’s been forced to walk back. In 2018, he vowed at a philanthropy event that he could beat Donald Trump in an election because he was smarter than the president, only to put out a statement hours later saying he shouldn’t have said it.
Dimon’s brag and apology reminded another Wall Street chief executive whose firm is a big Jpmorgan shareholder of Lloyd Blankfein’s joke years ago that Goldman Sachs Group Inc. was doing “God’s work.” The attempts bank bosses make to be witty take on lives of their own, said the executive, who asked for anonymity to avoid connecting his name to a mess. Dimon will also likely get through any fallout, just as Blankfein did, but the distraction will be unwelcome, the executive said.
The mea culpa underscores Jpmorgan’s desire to keep cordial relations in China, where it has nearly US$20 billion of exposure and has ambitions to expand further. Earlier this year, the bank won approval from Chinese regulators to fully own its China securities venture and wants to maintain its good standing in the country for further licensing requests, particularly ahead of major leadership changes in the party expected next year.
And while Dimon’s remarks have been met at least so far with silence from Chinese government officials, the country has a history of taking action against companies and individuals that appear to challenge its policies, especially on sensitive issues like the Communist
Party’s legitimacy or Taiwan. UBS Group AG came under pressure to fire its chief economist in 2019, 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.”
Dimon’s retreat also highlights the road businesses have to tread carefully when dealing with a government sensitive to perceived slights in a country where potential profits are high. In 2019, after the Houston Rockets general manager tweeted a message of support for Hong Kong protesters, National Basketball Association Commissioner Adam Silver was criticized for trying to appease both sides in his initial response.
Last year, when facing a backlash for referring to Hong Kong and Taiwan as countries, fashion brands Coach and Versace quickly sent apologies to calm consumers and correct their websites to show their respect for “the feelings of the Chinese people” and “national sovereignty.
Still, Dimon has enjoyed plenty of goodwill in China, which he has long eyed for its huge opportunities. He’s also attuned to the risks. In his 66-page annual letter to shareholders this year, Dimon dedicated more than a page to the country, writing that over the last 40 years, China has “done a highly effective job” with economic development. But he cautioned that in the next 40 years, the country will have to confront serious issues including lack of resources, corruption and income inequality.
Dimon noted that only 100 million people in China “effectively participate” in the nation’s one-party political system, a lower participation level than any other developed nation.
“China’s recent success definitely has its leadership feeling confident,” Dimon wrote in April. “Growing middle classes almost always demand political power, which helps explain why autocratic leadership almost always falters in a larger, more complex economy.”
His comments come as the U.S. and China grapple with protracted standoffs on issues such as market access, data security and international stock listings. Wall Street has also been trying to improve relations with the country in a bid to gain access to its US$54 trillion financial system.
It remains to be seen if Dimon’s comments will spark any retaliation from China, said Stone Fish, though he suspects that this may be where the debacle ends.
“Companies and individuals are waking up to the idea that what happens in China or the China space doesn’t stay in China,” he said. “It has real world implications for them and their businesses in the United States.”
WHAT HAPPENS IN CHINA … DOESN’T STAY IN CHINA.