Jamie Dimon of J.P. Morgan thinks President Trump has a decent read on China: they are getting a better deal from the U.S. on trade.
"Has trade been fair with China? The president has been pointing this out and -- I hate to tell you -- he's right and we all know it. Even the Chinese know it," JPM's CEO said in a business roundtable discussion in Washington that was posted by Yahoo! Finance on Wednesday. "We can't compete freely in China," he says. "I can't own 100% of a broker-dealer in China."
Dimon ran through a number of items where China holds an advantage. Lower cost labor was not even on the list. He mentioned intellectual property rights, cyber security, high tariffs for U.S. goods going into China coupled with entry barriers.
Never-Trumpers in Davos this winter were actually silly enough to paint Xi Jinping as the new herald of global capitalism. Xi made his first ever appearance by a Chinese leader at the World Economic Forum in January, where he was cheered for being the anti-Trump and where the Communist Party boasted about globalization and free trade. In nothing more than a slight against Trump, Davos Man himself was seen promoting an autocratic ruler of a political party that has been the outright enemy of global markets since the end of World War II. Not that China isn't reforming and slowly opening its doors; it is doing all of those things. But China is as much a bastion of fair trade as Antarctica is a ski resort because it has lots of snow.
See: In Davos, Communist China Now Leader Of 'Free Trade' World -- Forbes
Westinghouse Electric's Chinese Trojan Horse -- Forbes
On intellectual property, China was caught spying on the nuclear technology secrets of Westinghouse only to convince the mostly Japanese-owned firm to help them build nuclear reactors in China. It hopes to tap the world's largest market for nuclear reactors. But China is developing its own technology. Who doesn't think they learned a thing or two from Westinghouse projects in the U.S.? Their China-partnered projects are way behind schedule. And as a result, Westinghouse's owners Toshiba is in bankruptcy.
Xi arrives on Thursday for a two day visit with Trump. Over the course of Trump's campaign, he called China a currency manipulator and was the victor in a lop-sided trade relationship that leaves the U.S. with increasingly larger trade deficits.
"I don't think the meetings will go very well, but that the damage in the markets will be limited," says Andy Rothman, an investment strategist with Matthews Asia. "Neither side wants to blow up the relationship."
Two weeks ago, Hans Werner Sinn, a member of Germany's Economic Advisory Council, said Trump was "basically right" on another currency too; this time the euro.
"The euro is too cheap relative to the dollar, and Germany is selling too cheaply to its trading partners within the euro zone," Sinn says, writing in a Project Syndicate op-ed. "This undervaluation boosts demand for German goods in other countries, while making Germany reluctant to import as much as it exports." Sinn points out that the weak euro has other root causes that can be traced back to the 2008-09 financial crisis in the U.S.
Meanwhile, as the markets await Trump's meet-n-greet with Xi, Dimon predicts the two will have an "adult conversation".
"I know a lot of people in the room," he says. "There are very compelling reasons for the two countries to work together. I don't know whats going to happen," he says. "I wouldn't bet my company on it, but I'm hopeful."
