JPMorgan Chase President Jamie Dimon knew as soon as words came out of his mouth that a 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 anniversary. So is JP Morgan. I’ll bet we’ll last longer,” he said on Tuesday at an event in Boston. He then added, “I can’t say That’s in China. They might listen anyway.”
Damon, no stranger to daring, also knew that the Bank would have to orchestrate a hasty withdrawal. Soon, members of the company’s government relations team and China offices gathered to discuss the notes and decide whether to admit them or allow them to lie. About 18 hours later, when it became clear that the comments had attracted worldwide attention, Damon issued a statement of remorse.
“Hundreds of individuals, companies and organizations have apologized for hurting the sentiments of the Chinese Communist Party,” said Isaac Stone Fish, founder of Strategy Risks, which specializes in corporate relations with China. The way Damon said he regretted his comment was “a smarter way to do it”.
Dimon’s remarks came during a visit to the CEO Club at Boston College, following a slew of domestic and international trips as the JPMorgan CEO continues to promote America’s economic boom that also puts him at the forefront of Wall Street’s return to office. Pay. But his recent efforts to travel have been somewhat problematic – the exemption from quarantine he received for his visit to Hong Kong, an exemption also granted to actress Nicole Kidman, has drawn much domestic criticism.
Now he must downplay his comments in Boston — not the first time. Damon has a history of provocative statements that he has been forced to retract. In 2018, he pledged at a charity event that he could beat Donald Trump in the election because he was smarter than the president, but released a statement hours later saying he shouldn’t have said it.
Dimon’s bravado and apology reminded another Wall Street CEO whose company is a major shareholder in JPMorgan in a Lloyd Blankfein joke years ago that Goldman Sachs was doing “God’s work.” The executive, who asked not to be identified to avoid linking his name to the chaos, said the attempts by bank chiefs to be adept at taking their lives. It’s also possible Damon could go through any fallout, the executive said, just as Blankfein did, but that a distraction would be unwelcome.
The mea culpa underscores JPMorgan’s desire to maintain friendly relations in China, where it has nearly $20 billion in exposure and ambitions to expand further. Earlier this year, the bank won approval from Chinese regulators to fully own the Chinese securities project and wants to maintain its good standing in the country for more license applications, particularly ahead of major leadership changes in the party expected next year.
And while Dimon’s comments have been met with silence at least so far by Chinese government officials, the country has a history of taking action against companies and individuals who appear to challenge its policies, particularly on sensitive issues such as the legitimacy of the Communist Party or Taiwan. UBS Group AG was 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 that was “innocuously intended”.
Dimon’s decline also highlights that road companies have to tread carefully when dealing with a government sensitive to perceived failures in a country where potential profits are high. In 2019, after the Houston Rockets’ general manager tweeted a message of support for the Hong Kong protesters, National Basketball Commissioner Adam Silver was criticized for trying to appease both sides in his initial response.
Last year, when faced with a backlash for referring to Hong Kong and Taiwan as countries, fashion brands Coach and Versace sent out a swift apology to appease consumers and corrected their websites to show their respect for the “feelings of the Chinese people” and “national sovereignty”.
However, Damon has a lot of goodwill in China, which he has long looked forward to due to its massive opportunities. He is also aware of the risks. In his 66-page annual letter to shareholders this year, Dimon dedicates more than a page to the country, writing that over the past 40 years, China has done “very effective work” in economic development. But he warned that over the next 40 years, the country will have to contend with serious issues including resource shortages, corruption and income inequality.
Dimon stopped short of calling the CCP by name, but noted that only 100 million people in China “actively participate” in the country’s one-party political system, a lower level of participation than any other developed country.
“China’s recent success certainly makes its leadership feel confident,” Dimon wrote in April. “The growth of the middle classes has always required political power, which helps explain why authoritarian leadership has always faltered in a larger and more complex economy.”
His comments also come as the United States and China continue to face protracted confrontations over issues such as market access, data security and international stock listings. Wall Street is also trying to improve relations with the country in an effort to gain access to its $54 trillion financial system.
Stone Fish said it was not yet clear whether Damon’s comments would trigger any retaliation from China, although he suspects this may be where the disaster ends.
“Businesses and individuals are waking up to the idea that what happens in China or the Chinese space doesn’t stay in China,” he said. “It has real-world implications for them and their businesses in the United States.”
– With assistance from Max Abelson, Zijia Song and Sridhar Natarajan.