Jamie Dimon of JPMorgan Chase knew right away that his joke about China was going to land him in trouble.
“I was just in Hong Kong, I made a joke that the Communist Party is celebrating its 100th year. JPMorgan too. 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 was no stranger at bravado. However, he knew that the bank would be forced to make 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. Dimon released a statement of regret 18 hours later when global attention was drawn to the remarks.
“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 officer 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 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. Blankfein’s fallout will likely be handled by Dimon, however, Dimon won’t find the distraction as appealing.
The mea culpa underscores JPMorgan’s desire to keep cordial relations in China, where it has nearly $20 billion of exposure and has ambitions to expand further. The bank received approval by Chinese regulators earlier this year to own the China Securities Venture. It wants to keep its good standing in China for any further licensing requests.
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. After the Houston Rockets’ general manager sent a tweet of support to Hong Kong protesters in 2019, Adam Silver, National Basketball Association commissioner was criticised for his attempt to reconcile both sides.
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.
Dimon is still well-known in China. China has been a longtime dream of his. 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. He warned that the country would have to face serious problems in the coming 40 years including corruption, lack of resources and income inequality.
Dimon stopped short of calling out the CCP by name, but 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.”
As the U.S., China, and other countries continue to fight for market access and data security as well as international stock listings and listing issues, his comments are also timely. Wall Street is also trying to strengthen relations with China to get access to the $54 trillion global 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.”
—With assistance from Max Abelson, Zijia Song and Sridhar Natarajan.