JPMorgan has US$20 billion at stake as its CEO Dimon jokes about China

JAMIE Dimon's eyebrow-raising joke about JPMorgan Chase & Co outlasting China's Communist Party has so far been met by public silence from officials in Beijing.

But with nearly US$20 billion of exposure in the world's second-largest economy - and big ambitions to expand even further - the US bank has a lot riding on maintaining cordial relations with a government that's sensitive about anything that might be construed as questioning its legitimacy.

In one sign that JPMorgan is attuned to the risks, members of the bank's government relations team and China offices had internal discussions about CEO Dimon's remarks, according to a source.

While some executives expressed concern that the joke could be viewed as insensitive, the government relations team said that Dimon intended to stress the longevity of JPMorgan's China business rather than criticise the party.

As at midday on Wednesday (Nov 24) in China, the bank hadn't communicated with local government officials on the issue, the source said.

A JPMorgan spokesperson declined to comment. Chinese media, often quick to criticise perceived slights against the country by international companies, have yet to cover Dimon's remarks on the party. This is even as they wrote about several of his other comments on cryptocurrencies and US policy risks at a panel discussion on Tuesday.

"We hope to be there for a long time," Dimon said of China while speaking at the Boston College Chief Executives Club. He relayed a "joke" he made during a recent visit to Hong Kong: "The Communist Party is celebrating its 100th year. So is JPMorgan. And I'll make you a bet we last longer."

JPMorgan earlier this year became the first Wall Street bank to gain full ownership of a securities venture in China and has said that it is investing 2.67 billion yuan (S$571 million) in China Merchants Bank's wealth management unit. The bank's total exposure to China stood at US$19.7 billion as at September, mainly from lending and deposits, trading and investing, according to a regulatory filing.

China has a history of taking action against companies and individuals that appear to challenge its policies or slight it in anyway, particularly on sensitive issues including Taiwan, which Dimon also referenced on Tuesday.

In 2019, UBS Group came under pressure to fire its chief economist, Paul Donovan, after he made a comment about a "Chinese pig" in a note about rising consumer prices. He later apologised, saying that it was "innocently intended".

China also broke off relations with Norway for several years after dissident Liu Xiaobo received the Nobel Peace Prize.

China's financial markets are a potent lure for the world's biggest banks, with billions of potential profits on the line in investment banking and wealth management. Wall Street firms are doubling down on the country despite elevated US-China tensions and an increasingly opaque regulatory environment as President Xi Jinping cracks down on swathes of the private sector. BLOOMBERG