Thomas Hale in Shanghai, Joe Leahy in Beijing and Kaye Wiggins in Hong Kong 6 HOURS AGO
JPMorgan chair Jamie Dimon has warned that “uncertainty” over the Chinese government’s policies could hit investor confidence, as fresh data showed the recovery of the world’s second-largest economy was slowing.
“If you have more uncertainty, somewhat caused by the Chinese government . . . it’s not just going to change foreign direct investment,” said Dimon in an interview with Bloomberg TV, in response to questions on ’s Covid-19 policy and its
crackdown on consultants and the tech sector. “It’s going to change the people here, their own confidence.”
Dimon’s comments at a Shanghai banking conference hosted by JPMorgan come against a backdrop of worsening relations between the US and China, which is struggling to revive economic growth.
On Wednesday, official economic data showing a contraction in China’s factory activity cast further doubt over the country’s growth prospects, shaking regional equity markets.
The official manufacturing purchasing managers’ index came in at 48.8 for May, compared with 49.2 in April, according to the National Bureau of Statistics. Economists said several months of manufacturing readings below 50, which indicates a contraction, would lead the government to consider stimulus policies to support the economy.
Carlos Casanova, senior economist for Asia at UBP, said: “We expected that the initial rebound would be led by consumption and services post-reopening and that optimism would eventually translate into a broadening of the base of this economic recovery to include stronger manufacturing and investment.”
“That broadening has not taken place yet,” he added.
High hopes for a robust reopening in China have been scuttled by a lack of investor confidence and geopolitical tensions after the US shot down a suspected Chinese spy balloon and ramped up sanctions on semiconductors. China has also put pressure on foreign consultancies and over recent years increased regulation of domestic private sector players including tech companies and for-profit education businesses.
Dimon pointed to “scary” youth unemployment figures, which at more than 20 per cent in May reached their highest level since records began in 2019.
“They [China] need growth, too. And confidence is very important for growth,” said Dimon.
China’s economy grew rapidly in the first quarter but the rebound has begun to falter in the past two months. Property investment, credit and industrial profits have declined, while indicators such as retail sales have fallen short of analysts’
expectations, casting doubt on the government’s modest full-year growth target of 5 per cent.
“The foundation for recovery and development still needs to be consolidated,” said Zhao Qinghe, a senior statistician at the NBS, in a statement on Wednesday. In the manufacturing sector, he said, “production and demand slowed distinctly”.
The weaker factory activity drove Hong Kong’s Hang Seng China Enterprises index, which tracks large mainland Chinese companies, down almost 2 per cent on Wednesday, bringing the benchmark more than 20 per cent below its recent peak in January and plunging it into a bear market. China’s CSI 300 index of Shanghai and Shenzhen-listed stocks fell 1 per cent.
The renminbi slipped as much as 0.5 per cent to Rmb7.1128 against the dollar, bringing it down about 3 per cent for the year to date.
Dimon’s visit to Shanghai is one of several high-profile trips undertaken by foreign executives as China reopens following strict pandemic restrictions. Elon Musk, chief executive of Tesla, flew into Beijing on Tuesday and met foreign minister Qin Gang.
On Tuesday, Dimon met Chen Jining, Shanghai’s party secretary. In a statement published on the Shanghai government’s social media account, Chen said he hoped JPMorgan would continue to invest into China, while Dimon also said the bank would play a role as a bridge for foreign companies into Shanghai.
JPMorgan has invested significantly in the mainland, where the government has given foreign businesses greater flexibility to set up their own financial companies as part of a push to develop the country’s largely closed-off financial system. In 2018, Dimon said during an interview in Beijing that “we’re building here for 100 years”.
The bank’s Shanghai conference, which included speeches from Henry Kissinger and Baidu chief executive Robin Li, has attracted about 3,000 attendees but was largely closed to the media.
Fonte: Financial Times
