The Big Ideas

China in Jamie Dimon's Letter to Shareholders

JPMorgan Chase: Annual Report 2020 | Chairman & CEO Letter to Shareholders

Jamie Diamon | JPMorgan Chase
China in Jamie Dimon's Letter to Shareholders
China in Jamie Dimon's Letter to Shareholders
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April 11, 2021
BIG IDEA | ‘China does not have a straight road to becoming the dominant economic power’.
While Mr. Dimon’s analysis of China is very good, the great strength of his letter is his analysis of the problems facing America and proposals of solving them. The entire letter is well worth reading

‘China’s leaders believe that America is in decline.’

  • ‘Unfortunately, recently, there is a lot of truth to this.’

‘Over the last 40 years, China has done a highly effective job of maneuvering itself to this point of economic development.’

  • ‘Government officials can pull, in a coordinated way, fiscal, monetary and industrial policy levers to maintain the growth and employment metrics they want, and they have the control and wherewithal to do it.’

‘But their most important economic advantage is their huge home market, which they can use to develop their economy and their companies.’

  • ‘They have, as a result, been able to use this home market to subsidize some very competitive industries.’

‘But in the next 40 years, the country will have to confront some serious issues:’

  • ‘The Chinese lack enough food, water and energy to support their population; pollution is rampant; corruption continues to be a problem; state-owned enterprises are often inefficient; corporate and government debt levels are growing rapidly; financial markets lack depth, transparency and adequate rule of law; income inequality is higher than in the rest of the world; and their working age population has been declining since 2012.’

‘China does not have a straight road to becoming the dominant economic power.’

  • ‘To put this in perspective, America’s GDP per person in 2019 was $65,000 and China’s was $10,000.’
  • ‘Even if we do a rather poor job at managing our economy (growing at 2%), our GDP per person in 20 years would be $85,000.’
  • ‘And if the Chinese do a good job managing their economy, their GDP per person in 2040 would still be under $35,000.’ [But multiplied by several times the U.S. population.]