In an exclusive interview with CNBC-TV18, Dimon mentioned that the US has become too reliant on China for essential resources like rare earths, semiconductors, and pharmaceutical ingredients. He emphasized that this presents significant risks, particularly as policy disagreements between the US and China grow.
He also noted that China’s efforts to strengthen its industries have raised concerns about its dominance in the global market.
Below is the verbatim transcript of the interview.
Q: How does it feel to be back here?
Dimon: It’s wonderful. I mean when you get out, you meet your own people and the clients. Since I have been here, we have gone from 6,000 employees here to 60,000. And they are across all things- data, scientists, engineering. We cover 150 companies in research and banking, 850 multinationals are coming here, custody, and asset management. We have just been growing with the country and your country has been growing quite well, and I am quite optimistic about the future of India.
Q: Markets have been booming as well.
Dimon: Yes.
Q: I want to start with a news which just came out. A government-to-government deal between the US and India to set up a semiconductor fab unit in the country. There are elements of technology transfer, etc. that is the cutting-edge semiconductor and sort of plans to localise production. I just wanted your thoughts.
Dimon: I think it’s great. India is called a non-aligned nation, and I don’t think we should be asking it to align, but I think it’s great that we’re reaching out to each other, helping each other, investing in each other and I would love to see far more of that. This has two elements, one is the national security part, which of course all countries are interested in, and the second is just a better economic relationship.
Q: Over the last two, or three years, we have seen the rise of the so-called industrial policy across the world. National security is being prioritised as you said, do you see this as part of that, in the context of that?
Dimon: I think to combat some of these things and to do things in your country’s interests which are hard to do economically you can need some industrial policy like the United States has for rare earth and things like that in lithium. Every country is different, so the national security needs of India are going to be more on energy. I think for everybody it is going to be semiconductor chips, so I do think there is a need for industrial policy.
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I would caution industrial policy being used for regulations, bureaucracy, politics, votes, social, it’s not going to work. So, you got to be a little cautious when you use it. But you got to have some and like I said, it’s very important that America and India have a great economic relationship.
Q: Would you agree though that industrial policy is kind of taking the lead. Businesses and who you align with, who you want to do business with, building supply chains, a lot of that is now seemingly led by that.
Dimon: It’s two different things. Governments have always negotiated economic arrangements and stuff like that. If you look at the United States, the industrial policy is a very tiny part of the economy, so it isn’t like it’s taking over the economy. In other parts of the world, it is obviously a much bigger part of the economy. But yet nations because of national security and because of what somebody might consider unfair competition there will be forms of industrial policy. If I was a government I would be very careful. It should be very targeted, very specific, it shouldn’t be to protect local industry, it shouldn’t be to just create jobs, it should be for very specific reason and you’re going to see it and hopefully it’s well done.
Q: The US has been trying to reduce its dependence on China. India has been and is expected to be a big beneficiary of it. Do you think we are sort of using that full potential right now or there’s a long distance to go?
Dimon: Going to China — national security America was overly reliant. It has not been angry with them, but you should ask why we didn’t do it before, but in terms of rare earths, semiconductors, Penicillin, ingredients for pharmaceuticals, obviously every nation looks at it and says we can’t rely on someone who might one day be an adversary for supply. Just like JPMorgan has always had multiple diverse supply chains. We don’t rely on anything. The second one is around disagreements around policy. Countries are aiding the betting industries to dominate global industry and beg of thy neighbour, that’s not going to work either. So, you are going to be hard fought. It’s not going to cause de-globalisation, but it’s important that countries do that.
It has just started, it would take years — you’re talking about 5, 10, 15 years. So even if it’s going to take place, it’s going to take a long time, but companies are doing it on things like iPhone. I know you have iPhone production. So, some things can move quick, some will take years, huge opportunity for India. People call it the China+1 strategy. Companies that relied solely in China are looking at India, Vietnam, Malaysia, Indonesia etc.
Q: We’ve got US elections and I think one thing which both Democrats and Republicans agree on is China. You’d agree with that? In that sense what’s happening is in a way irreversible? The break in relations, sort of a cold war.
Dimon: I think you have to be very specific in this one. I think national security everyone has got to do, unfair trade everyone is going to do. I think because of the Ukraine, the terrorism at Israel, Russia, Iran not abating, China’s kind of on the other side of America now. While that’s causing a lot of attention I think the better thing to do is get fully engaged which they’ve done to try to protect ourselves in national security and unfair trade. And I think if the war goes on, there will be far more contentious issues because of that. So both sides I think will be fully engaged. Both sides are going to be tough, but I don’t think either side is talking about disconnecting.
Q: What can India do to attract more foreign direct investment (FDI)? The conditions are ripe as you said, the economy is doing very well markets are booming. What else can we do to accelerate this process?
Dimon: I think for sure you’ve done a lot. The change into GST, the tax system along the states, national infrastructure, your schools are graduating a lot of extremely bright talented people, those are the things to do. Reduce regulations. Here regulation, and bureaucracy does cripple foreign direct investment. So make it easier for foreign direct investment to come here and then you have to do industry by industry. But I do think you should be attracting it, it’ll help you grow much faster.
Q: Let’s talk about the big event from last week which is interest rates coming down. The Fed cut by 50 basis points. Do you think it was a bit excessive given the fact that GDP is expected to grow at 3%, the stock markets are at an all-time highs, there’s no issue with credit spreads etc. Indicators are all pretty good and you get a 50 basis point cut. What did you make of it?
Dimon: I think it’s got a lot more ink than it deserves. I think they raised to five very quickly, they were a little late which they acknowledged. They raised till five, the economy is slowing down, inflation is coming down and relative to inflation which is at 3%, the five is maybe a little bit too high. So they made a big step to get it closer to what they think it might be. They’ve got plenty of room to go down, and hopefully, we will continue to exhibit growth with inflation coming down. I’m a little more sceptical than other people about that, but it is happening and they’re just reflecting reality.
Q: You’ve been cautious in the past about prospects and said well one has to be prepared for things going wrong Are you a little more positive now? I mean this is not a cut when you’re facing a recession or things are looking weak, it’s like a happy cut.
Dimon: My caution is all geopolitics which may determine the state of the economy. The geopolitics is getting worse, they are not getting better. There is chance for accidents in energy supply, god knows if other countries get involved. You have a lot of war taking place right now. You have American warships being attacked almost every day in the Red Sea. That’s my biggest caution. The economy fluctuates, I’m not worried that much about the fluctuation of the economy. Obviously the Federal Reserve will try to do its job to moderate the vicissitudes of the economy, but we are spending a lot of money. And in my view spending the money causes growth, it also causes inflation.
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I think it’s true for countries around the world. We got to like really think through how much debt countries can put on before it causes a real problem. So I’m a long-term optimist, short term I’m a little more sceptical than other people that everything’s going to be great.
Markets are pricing things like they’re going to be great. Put me on the cautious side of that one.
Q: Rising interest rates did not hurt markets, will falling interest rates be an impetus. Can they be a further impetus?
Dimon: It is not about rising rates. Sometimes history rhymes, it’s not always the same. I think when rates went from zero to 2.5%, that was barely rise in rates, that’s just kind of normalisation and we had very strong growth coming out of COVID. So, 5% was probably needed to slow things down just a little bit.
But underneath the rate, there’s a real economy. No one knows what that real economy is going to do next year. So I don’t look at it like they’re panicking – maybe economy will get stronger, maybe it’s going to get weaker. Remember they’re reacting to data they see today and then you could try to predict what the data could be a year from now. I think there’s more underlying inflation because of things like the green economy, fiscal spending, re-militarisation in the world, demographics, those things will drive inflation down the road. Even AI, in my view right now it’s all inflationary because you are hiring a lot of talent around data. The deflationary part may happen, but that may be several years down the road.
Q: When you say you are a bit more sceptical, is that the economy you’re sceptical about or markets and what they’re pricing in?
Dimon: Both. I think the stock market and the bond markets are pricing in a soft landing. But you also look at, stock markets are generally very high and bond spreads are very low and that’s kind of goldilocks and that may very well happen. I mean, I’m hoping for that. I just give it a lower odds than the market does.
Q: You said geopolitics is still the biggest worry for you. Who in the White House in the next two months is best place to end the war in Ukraine?
Dimon: I don’t think it could be ended in next two months. I think it’s getting worse. I’m sure the Biden administration have tremendous respect for Anthony Blinken and Jake Sullivan. I think they’re doing the best they can. But remember there are adversaries, there are other people. This is not a unilateral action America can take, and then America has got some tough decisions to make just like Europe. And so I think the allies need to really get prepared for a longer war and unfortunately more military to help the Ukrainians. That is the only thing which will eventually lead to some kind of peace or armistice in Ukraine’s interest.
Q: Who are you supporting if I can put it bluntly?
Dimon: I am not endorsing anyone this time. I spend more of my time on policy. What’s the policy we need that can really help both the world, that’s foreign policy and domestically. I would have a negative income tax, I would reduce some regulations. I would love schools to judge themselves that when the kids in high schools and community college when they graduate, what kind of job do they get. So you’re focusing on the outcome not just the input. I think there are a lot of things to do to make America healthier and to lift up all of our citizens.
If you look at the data we’ve left behind the bottom 20%. So, we should focus on that. They’re also dying younger? There are more crimes in neighbourhood, and that’s kind of why you have populism. So I think we need to do a lot just in America to lift up our country and as we do that it helps the rest of the world.
Q: Donald Trump in an interview said that he may tap you to be the Treasury Secretary. I just wanted to ask you this.
Dimon: Definitely not. I don’t expect to be the Treasury Secretary.
Q: Elon Musk has said openly that he would love to be part of a Trump administration.
Dimon: This idea about having an efficiency commission, I actually like the idea. I think governments have to become more efficient, more competent and look at when they take money what do they get for it?
I actually think that’s a very good idea. It’s kind of like remember Al Gore had the reinventing government. We really need to do it. In America we will do it, I’m sure. A lot of the countries need to do the same thing.
Q: Do you think under the Trump presidency, I mean one of the big things which we all talk about and he said many times is tariffs essentially go up quite a bit especially with China but matching tariffs for all trading partners. Do you think that’s a likely scenario?
Dimon: I don’t know the answer to that. I’ve spoken to some of his top advisors and they say it’s more of a negotiating tactic than an expected outcome.
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Remember they did negotiate USMCA, they did negotiate with China. So yes, I think the tactic would be rolled out. I would prefer we just end up with better trade deals.
Q: What about JP Morgan’s plans here in India? I mean you’ve been here a long time, you’re growing fast in this economy. Tell us a little bit about what your plans are?
Dimon: You mentioned how much we’ve grown here since I’ve been coming here, I think that will continue for the next 30 years. You have some wonderful industries, some great technology, you have great schools, you are building infrastructure, those are things which will drive it. And we are just a cog in that machine. We take that research we do and we take it around the world, we take your Indian companies around the world and help them raise money in America and parts Asia. We bring in a lot of multinationals and we’re expanding what we cover. We’re doing more what I call commercial banking here, like smaller companies etc, so I think that will continue for as far as we can see.
Q: We’ve got so many foreign companies who want to list here in the public markets. There are Korean companies, American companies, you have a bird’s-eye view of what’s going on, you think we’ll see more and more of that for the next few years?
Dimon: I think possibly. People’s list is affected by multiple different things, but I think if you do the right things here, then yes.
Q: When you speak with investors and some of your peers what are the two or three things that you hear about India right now? Because it’s been kind of unreal in a good way how well the markets are doing. What do you hear about India’s feedback? I must point out that foreigners have not been big buyers of Indian stock in 2024 or 2023, it’s a local driven sort of market. Will that change? What do you hear?
Dimon: I have just got here. One of the reasons I travel a lot is I get to learn a lot and be more up to date. I think the markets will grow over time. Because India is going to grow and India is doing a lot of the right things, I would say just continue doing the right things and continue to attack that bureaucracy. The biggest complaints we ever get is about bureaucracy, regulations, not dissimilar in my own country, but can you attack that, make it easier for foreign direct investments to come in and yes, you will grow and expand and have bigger markets here.
Q: A quick last word about what your plans are? You are one of the last rock star bankers if I can put it that way, and I’m not exaggerating.
Dimon: I love my job, I literally love doing it. I can help our employees or clients I think it lifts up countries. We finance schools and states and hospitals and governments and big companies and small companies, and then we have policies to lift up parts of society who need a little bit of help, so I love it. Eventually, I will leave, we’ve got great successors, we’ve got built-in successors. If you ask the analyst community, they can point four or five people who they think are quite capable and so some time down the road some of those people move up and maybe I’ll go to chairman for a while or something like that and when I do I’ll miss it.