Photo taken on May 1, 2023 shows a sign at the JPMorgan Chase & Co. headquarters in New York, the United States.
Michael Nagle | Xinhua News Agency | Getty Images
China is too big to be sidelined, and investors “have to do business there,” JPMorgan Asia Pacific CEO Sjoerd Leenart said Thursday, adding that the country had emerged as the second world power.
International companies are still investing in the economic powerhouse, and “it’s an incredibly important place,” Leenart told CNBC’s Sri Jegarajah at the 20th annual Global China Summit in Shanghai.
In terms of purchasing power parity, China currently accounts for 19% of global GDP and 48% of Asia’s GDP.
“You can’t ignore it, you have to do business there, even if you decide not to do business there, you need to understand what’s going on,” Leenart said, adding that what happens in China “influences every industry around the world.”
Given how extensively China is linked with the region, Leenart emphasized that there needs to be “good activity” in China in order to have a buoyant investment banking business.
“Banking in Asia also can never be full speed if China isn’t running,” he said.
Investors are holding out hopes for more signs of economic recovery to regain confidence in China though, he said. China’s economy has stalled in the last few years, dragged down by an embattled property sector.
“I think investors are encouraged by the early signs,” said the investment bank’s APAC CEO.
China’s economy in the first quarter grew faster than expected, according to official data released in April by China’s National Bureau of Statistics. GDP in the January to March period grew 5.3% from a year earlier — faster than the 5.2% expansion in the fourth quarter of 2023 and 4.6% expected by economists polled by Reuters.
Leenart added foreign direct investment into the country fell last year, but it has to be seen in the context that FDI has been growing for the last 50 years: “Every market will take its pause.”
China remains the top trading partner to more than 120 countries. It is still the largest trading partner to Japan, South Korea, Taiwan and Vietnam, according to U.S. think tank Wilson Center.
“I think that [China] have a lot to sell to the world, and that product will be needed all over the world,” said Leenart, adding that he sees a lot of opportunity in China.
“We’ve been here for 103 years. So we we’ve taken a long term view on China, and we’ll be here for 100 more years to come,” he said.