Jamie Dimon used his annual letter to JPMorgan Chase shareholders to highlight America’s need to engage with China, a nation he said has established itself as a “potential superpower” with influence to rival that of United States
However, the self-proclaimed “capitalist, ruthless, resourceful, patriotic and inexperienced CEO” said that while collaboration between the two countries is crucial, it is his home nation that should set the global political and economic agenda.
In his letter to shareholders published Monday, the leader of America’s largest bank wrote that geopolitical tensions are at the top of his list of concerns.
Government and business in the Western world “have fundamentally underestimated China’s growing strength and potential threat,” Dimon added, saying the communist nation was “comprehensively and strategically focused” on its national economic security while the The West was “sleeping”.
“Over the past 20 years, China has implemented a more comprehensive economic strategy than ours,” Dimon added. “The country’s leaders have successfully grown their nation and, depending on how you measure it, have the first or second largest economy in the world.
“That said, many question the Chinese leadership’s current economic focus because they don’t have it all figured out yet.”
China actually has a number of problems.
It is experiencing a housing crisis after the country’s largest developer, Evergrande, once worth $50 billion, is now trading its debt at less than a cent on the dollar after a near-total collapse.
The Chinese government has washed its hands of the issue, even if it means that apartment buildings remain unfinished and jobs are lost.
Meanwhile, youth unemployment is at record levels, while price-conscious consumers are forcing investments away from premium brands towards cheaper alternatives.
That said, Dimon identified three ways in which the United States has overlooked its growing dependence on China, thus giving it some level of control.
Dimon, who received a record $36 million for his work in 2023, said: “The first is companies’ over-reliance on China as the only link in their supply chain, which can create vulnerabilities and reduce resilience”.
Often this reliance is on consumer goods and sneakers, which the Harvard Business School alumni say are not “critical or complex” and will “eventually get fixed.”
What poses a greater threat is the United States’ dependence on China for its national security, which Dimon says is the “most critical” aspect of the problem.
“The United States cannot rely on any potential adversary for materials essential to our national security,” he explained.
“We are thinking, among others, of rare earths, 5G and semiconductors, penicillin and key materials for essential pharmaceuticals. Furthermore, we cannot share vital technologies that could enhance an adversary’s military capabilities.”
The third is to ensure that America remains at the forefront of key sectors such as electric vehicles, artificial intelligence and renewable energy, he wrote: “We cannot cede our important resources and capabilities to potential adversaries.”
Be tough, but commit
The 68-year-old may have identified several ways in which the United States has inadvertently ceded power to China, but he insisted that America still has “an enormously strong hand.”
This is thanks to “abundance of food, water and energy; peaceful neighbors; and what remains the most prosperous and dynamic economy the world has ever seen, with a GDP per capita of more than $80,000 per year,” she explained. “Most importantly, our nation is blessed with the benefit of true freedom and liberty.”
Because of its size, the United States will need to maintain a relationship with China for its own prosperity and that of other nations, Dimon writes.
Dimon’s strategy moving forward is not to complain about China’s influence, but to address the current situation. “Let’s not cry over spilled milk: let’s just fix it,” he wrote.
“We must build and implement our long-term, comprehensive economic security strategy to keep our position safe and secure,” he added. “I believe that a respectful, strong and coherent commitment would be best both for our countries and for the rest of the world.”