How Jamie Dimon’s Hong Kong visit highlights the enduring stability of US-China trade relations
- No matter how bad the geopolitics seems between Beijing and Washington, business and trading relations are likely to remain active and cordial
The Hong Kong government said the exemption for Dimon was justified because the visit was short and “in the interest of Hong Kong’s economic development”. On the contrary – Dimon is desperate to preserve J.P. Morgan’s business in China.
He did not come here to save the world. Instead, it was merely to speak to a “town hall”, a mass grouping of bored, masked and cynical bankers, mustered in a hotel room or online to hear the boss say how wonderful he is.
To come all this way with scant regard for local regulations indicates that perhaps it was more important than J.P. Morgan is saying. It gives the distinct impression the government is star-struck every time a big foreign name seeks to visit.
Therein lies the key point. No matter how bad the geopolitical issues between China and the United States appear, business and trading relations are likely to remain active and cordial.
Nevertheless, the talks have seen a slight easing of tensions that have been palpable since the early days of the Trump administration. It should be remembered that the two men have known each other for decades and both know the key to their continued political survival is a successful economy. As ever, “it’s the economy, stupid.”
The world will not go back to the Cold War era because every country’s economic lifeblood is now too interlinked. China, the US and Europe need each other. No one has the upper hand, as the West had over China in the 1990s and China had over the West in the 2010s.
Without China’s huge industrial economy to provide Europe and the US with personal protection and testing equipment for Covid-19 at short notice, the West would have struggled to contain the pandemic.
China’s currency has seen some demand from foreign inflows, which will form an important cushion as pandemic-driven demand inevitably falls off. The hangover from the pandemic economy means factories will have to retool and demand for heavy commodities such as steel and coal will become dominant once more.
The latter factor will begin to sting if the labour force starts to demand the kind of higher wages it did in the mid-2000s. This inflation will then spill over into the rest of the world through exports.
Dimon did let slip his views on the damage that the quarantine system is doing to Hong Kong’s economy by saying the rules do “make it harder” to attract and retain talent. If he had spent three weeks in quarantine just to hold a one-hour meeting, even in a palatial suite, his comments would undoubtedly have held more weight.
Richard Harris is chief executive of Port Shelter Investment and is a veteran investment manager, banker, writer, broadcaster and financial expert witness