Jamie Dimon warns ‘uncertainty’ caused by Beijing could hit investor confidence

JPMorgan chair is in Shanghai at a conference attended by several US executives

JPMorgan chair Jamie Dimon has warned that “uncertainty” caused in part by the Chinese government could hit investor confidence, as fresh data showed the recovery of the world’s second-largest economy was slowing.

“If you have more uncertainty, somewhat caused by the Chinese government . . . it’s not just going to change foreign direct investment,” said Dimon in an interview with Bloomberg TV. “It’s going to change the people here, their own confidence.”

Dimon, speaking in Shanghai at a banking conference hosted by JPMorgan, pointed to “scary” youth unemployment figures, which at more than 20 per cent in May reached their highest level since records began in 2019.

“They [China] need growth, too. And confidence is very important for growth,” said Dimon.

His comments come against a backdrop of worsening relations between the US and China, which is struggling to revive economic growth. On Wednesday, fresh economic data showing a contraction in China’s factory activity cast further doubt over the country’s growth prospects and hit regional equity markets.

The official manufacturing purchasing managers’ index came in at 48.8 for May, compared with 49.2 in April, according to the National Bureau of Statistics. Economists said several months of manufacturing readings below 50, which indicates a contraction, would lead the government to consider stimulus policies to support the economy.

“We expected that the initial rebound would be led by consumption and services post-reopening and that optimism would eventually translate into a broadening of the base of this economic recovery to include stronger manufacturing and investment,” said Carlos Casanova, senior economist for Asia at UBP. “That broadening has not taken place yet.”

China’s economy grew rapidly in the first quarter but the rebound has begun to falter in the past two months. Property investment, credit and industrial profits have declined, while indicators such as retail sales have fallen short of analysts’ expectations, casting doubt on the government’s modest full-year growth target of 5 per cent.

Read also: These fintechs offer instalment payments for solar power

“The foundation for recovery and development still needs to be consolidated,” said Zhao Qinghe, a senior statistician at the NBS, in a statement on Wednesday. In the manufacturing sector, he said, “production and demand slowed distinctly”.

The weaker factory activity drove Hong Kong’s Hang Seng China Enterprises index, which tracks large mainland Chinese companies, down more than 2 per cent on Wednesday, bringing the benchmark more than 20 per cent below its recent peak in January and plunging it into a bear market. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks fell 1.2 per cent.

The renminbi slipped 0.4 per cent to Rmb7.1051 against the dollar, bringing it down almost 3 per cent for the year to date.

Dimon’s visit to Shanghai is one of several high-profile trips undertaken by foreign executives as China works to reopen following strict pandemic restrictions. Elon Musk, chief executive of Tesla, flew into Beijing yesterday and met foreign minister Qin Gang.

On Tuesday Dimon met Chen Jining, Shanghai’s party secretary. In a statement published on the Shanghai government’s social media account, Chen said he hoped JPMorgan would continue to invest in China, while Dimon also said the bank would play a role as a bridge for foreign companies into Shanghai.

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

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