West has ‘good hand in China economic battlefield but it doesn’t have to be war’
The boss of the world’s biggest bank has told Sky News that Western economies have a “good hand” in the “economic battlefield” with China but declared it does not have to be war.
In a wide-ranging interview with Sky’s Wilfred Frost, chief executive and chairman of JPMorgan Chase Jamie Dimon said the West was going to have a “hard time” as long as China had close ties with Russia.
But he said it was well placed due to the resilience of their collective economies and long-standing partnerships, such as NATO.
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However, he warned of the dangers of fragmentation since Donald Trump, when US president, pulled out of the Trans-Pacific Partnership in 2017.
He also said that Joe Biden’s administration should have worked with allies over the effects of his Inflation Reduction Act.
The massive programme of incentives to bolster the green economy had the effect of taking investment out of Europe at a time when Russia’s war in Ukraine was dominating the agenda.
The bank boss warned too of a backlash from China over US tariffs against its electric cars and solar panels announced just this week, arguing that a joint approach from western powers over China more generally would carry more weight.
Mr Dimon, who has run JPMorgan since 2005 and is widely seen as the most influential boss of a financial services company in the United States, said: “We have competition with China.
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Why is the US taking aim at China?
“I think the American government is doing the right thing to fully engage. That doesn’t mean the Chinese are going to like everything we do just like we don’t like everything they do but it doesn’t have to be war, it can be tough competition and we should be prepared for that.”
“The most important thing”, he added, “is that we do it together”.
“They’re not an enemy, you know, but they’re competing. They want a different world than we want. And I think they want a different world than we want in the Western world… it’s worth fighting for.”
“We all made a little bit of mistake in how we kind of expected them after WTO (World Trade Organisation) to become more Western and things like that. It’s okay. Don’t cry over spilled milk,” he concluded.
Mr Dimon was speaking 24 hours after the US-based bank, which has 22,000 staff and a 200-year history in the UK market, announced £40m in new investments to help connect young people and underserved communities to economic opportunities.
They followed the opening of a new tech centre in Glasgow.
JPMorgan Chase – perhaps best-known in this country for its Chase retail division – is the biggest bank in the world by market value with a capitalisation of almost $600bn (£475bn).
Mr Dimon, who was initially critical of Brexit following the UK’s split from the EU, spoke of the bank’s continuing commitment to the country having called the future of its UK operations into question in 2021.
Asked about the looming election, he said that talks with Rishi Sunak and Sir Keir Starmer had left him in no doubt that both the Conservatives and Labour were “pro business”.
He described how growing economies benefits everybody as it allows for investment.
“Everybody I heard… Conservative and Labour, (is) talking about growing the economy, technology, research and developments, simplifying regulations, making it easier for people to start businesses and grow businesses, making sure schools educate… those policies work,” he said.
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The average two-year mortgage rate has fallen below 5% for the first time since the Liz Truss mini-budget.
The interest rate charged on a typical two-year fixed mortgage deal is now 4.99%, according to financial information company Moneyfacts.
It means there are more expensive and also cheaper two-year mortgage products on the market, but the average has fallen to a near three-year low.
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Not since September 2022 has the average been at this level, before former prime minister Liz Truss announced her so-called mini-budget.
The programme of unfunded spending and tax cuts, done without the commentary of independent watchdog the Office for Budget Responsibility, led to a steep rise in the cost of government borrowing and necessitated an intervention by monetary regulator the Bank of England to prevent a collapse of pension funds.
It was also a key reason mortgage costs rose as high as they did – up to 6% for a typical two-year deal in the weeks after the mini-budget.
Why?
The mortgage borrowing rate dropped on Wednesday as the base interest rate – set by the Bank of England – was cut last week to 4%. The reduction made borrowing less expensive, as signs of a struggling economy were evident to the rate-setting central bankers and despite inflation forecast to rise further.
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Bank of England cuts interest rate
It’s that expectation of elevated price rises that has stopped mortgage rates from falling further. The Bank had raised interest rates and has kept them comparatively high as inflation is anticipated to rise faster due to poor harvests and increased employer costs, making goods more expensive.
The group behind the figures, Moneyfacts, said “While the cost of borrowing is still well above the rock-bottom rates of the years immediately preceding that fiscal event, this milestone shows lenders are competing more aggressively for business.”
In turn, mortgage providers are reluctant to offer cheaper products.
A further cut to the base interest rate is expected before the end of 2025, according to London Stock Exchange Group (LSEG) data. Traders currently bet the rate will be brought to 3.75% in December.
This expectation can influence what rates lenders offer.
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