By James Pethokoukis
Bank boss Jamie Dimon’s funny little joke — one he’s now apologized for — about JPMorgan Chase & Co. outlasting China’s Communist Party may turn out to be prescient. After all, the CCP has been around only since 1921, while the original JP Morgan & Co. was founded in 1871. So the capitalists have a half century on the communists. The House of Morgan has shown tremendous resilience and staying power, surviving and prospering through global depressions, pandemics, and wars.
For its part, the CCP’s greatest challenges probably still lie ahead. The days of easy and rapid catch-up economic growth — the thing that gives the CCP its legitimacy — are over, especially with Beijing re-embracing state planning over markets. As my AEI colleague Derek Scissors has noted, “Beijing has long abandoned the pro-market path and shows no true interest in returning to it.” The Economist recently noted the following: “The World Bank calculates that, since 2008, China’s total-factor productivity (tfp) — the amount of gdp growth that cannot be explained by capital or labour — has grown by just 1.1% per year, less than a third the rate of the previous three decades.” And I think this risk highlighted by the magazine is a critical one:
The risk for China is that Mr. Xi’s vigorous assertion of statist prerogatives will dull the kind of innovation, competitive spirit and unbridled energy that powered China’s explosive growth in recent decades. The economic policies that helped nurture e-commerce giant Alibaba Group Holding Ltd., tech conglomerate Tencent Holdings Ltd. and other global success stories seem to be at an end, say economists inside and outside China. As a result, they say, Chinese companies are becoming less like American ones, which are driven by market forces and depend on private innovation and consumption.
Moreover, as I recently asked in my Faster, Please! newsletter, “What kind of ecology for discovery, invention, and innovation will there be in an AI-tocracy surveillance state, one that seems ever-more intent on stifling dissent from businessmen, academics, and others?” Not only that, what kind of magnet is Xi Jinping creating to attract global talent for a country with big demographic issues? Economist Tyler Cowen made a great point about the talent issue during an AEI event in April, responding to my question about whether this would be the American Century or Chinese Century: “How many really smart immigrants want to go live in China? I think that settles it.”
At century’s end, the CCP may still be around. Hey, Russia still has a Communist Party. But I’m guessing that running JPMorgan, or whatever it calls itself then (JPMorgan Chase & Crypto.com, perhaps?) will be the better gig.