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

Richard Harris

Published: 3:30am, 19 Nov 2021

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JPMorgan Chase CEO Jamie Dimon, who heads one of the world’s biggest banks, swanned in and out of Hong Kong on Monday in his Gulfstream private jet. It would not be an unusual visit in the old days, but in the wake of the UN climate change conference, a whiff of hypocrisy now surrounds his firm’s green credentials.

Even more unusual was that he was excused the required three weeks of quarantine. The chairman of an American bank receives a Nicole Kidman-type pass while our local airline, Cathay Pacific, is crushed by increasingly onerous restrictions on its pilots – who, by the way, are bringing in the things we need.

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.

03:41

Why Nicole Kidman’s Hong Kong quarantine exemption is unfair

HSBC chairman Mark Tucker and CEO Noel Quinn both did their three-week quarantine, yet Dimon and his entourage get a free pass to potentially break our “zero-Covid” environment. As many said during the Kidman affair, there is one rule for them and one rule for us.

If a video conference is good enough for the two most powerful men in the world – and in the process saving some rainforests – it is certainly good enough for the boss of a “huge bank”.

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.

Dimon himself said he was “not swayed by geopolitical winds”. The same goes for the Hong Kong government as it tried, and failed, to stay above the storm.

02:25

Xi Jinping and Joe Biden call for mutual respect and peaceful China-US coexistence

The long-awaited video conference between President Xi Jinping and US President Joe Biden began by looking at the areas of common ground, not the differences. It appears the discussions quickly moved to the contentious matters of trade, technology, Taiwan and climate change.

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.

Trade will continue cordially – unless, of course, open conflict breaks out between the two, with Taiwan being the most likely flashpoint.

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.

On their part, Europe and the US have generated the kind of demand that has been crucial to support China’s economy through its pandemic slowdown. China made, Europe paid and everybody is happy.

The importance of continuing trade is seen in China’s record trade surplus, which by October had surpassed that of the whole of 2020. That means healthy additions to China’s foreign exchange coffers, which should in turn maintain the recent strength of the yuan.

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.

China’s deep-seated economic issues will also become emphasised again. There is the massive debt in the property sector, power supply imbalances, the continued pursuit of a zero-Covid policy and – the biggest threat of all – inflation.

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.

Meanwhile, Hong Kong remains like a cork on the tempestuous seas. Yet another postponement of the Hong Kong Sevens, which was moved from April to November 2022, is occupying the conversation of the drinking classes.

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