ATHLETES PLAY FOR OLYMPIC GOLD, CHINA FOR A LOT MORE
If you think the 2022 Winter Olympics, due to open in Beijing on February 4, are about men and women of great strength, or great speed, or great specialised skill competing on a level playing field for medals, think again. The Olympics are a massive money machine combined with an extension into sport of the battle between communist/authoritarian China and capitalist/democratic America to win global esteem.
The reactions to China’s decision to “cancel” number-one ranked doubles tennis star Peng Shuai for accusing former vice premier Zhang Gaoli of sexual assault revealed something about Olympic economics. When Steve Simon, CEO of the Women’s Tennis Association, cancelled all tournaments in China, the WTA forfeited the balance of a $1-billion, ten-year deal that in 2019 produced $30 million in prize money for women’s tennis. “This is about what’s right and wrong,” said Simon. Not for everyone.
Money Talks And Dimon Wishes He Hadn’t
The International Olympics Committee pronounced Peng Shui safe after a brief video conference call certainly monitored by her gaolers. The IOC, of course, has its eye on its own “Olympic Gold” – the flow of cash from deals such as NBC’s 2014 payment of $7.75 billion for broadcast-rights contract through 2032. The Olympic committee is not famous for parsimony when traveling the world to interview cities competing for the next games. It “does not lack for comfort or money,” as the Tampa Bay Times put it.
And the National Basketball Association chose silence rather than support for its fellow athletes in the WTA. Its millionaire, Nike-shod players depend on the NBA’s cosy relationship with the PRC for broadcast revenues and brand endorsements from a basketball-mad nation with 800 million fans, 300 million of whom play the game. In 2019 China banned broadcasts of NBA games because a league official criticised the regime. That cost the NBA $400 million. It now bans broadcasts of Boston Celtic games because a player has criticised the PRC’s human rights record.
Meanwhile, America’s financial community is stepping up its support for China’s economy, which desperately needs foreign investment. Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, raised $1.25 billion for investment in China. Dalio said it is not for him to “be an expert” on government policy. “Should I not invest in the United States because [of] our human rights issues?”
Other investment bankers are scrambling to set up in China to flog their financial products and help government-controlled Chinese companies raise capital to supplement government subsidies used to compete with American companies. And, capital being fungible, continue to finance its military build-up. Citigroup, to cite only one example, will be applying for the right to underwrite and trade in yuan-denominated stock and bond offerings. Some idea of the bankers’ fear of antagonizing Xi Zinping and the regime is provided by Jamie Dimon, CEO of this country’s largest bank. In a remark made after visiting China and noting that both the Communist Party and JPMorgan Chase were celebrating their 100th year, he off-script added, “I’d make a bet we last longer.” The two reported apologies are likely outnumbered by the private offerings.
Xi Goes For Gold, and Ronaldo
Bankers might ignore the stakes involved in what appears to be mere athletic contests, but China’s president, Xi Jinping surely does not. “Chinese athletes, he proclaimed, “strive for good scores and win glory for the nation.” Not incidentally, China is determined to build a multi-trillion sports tourism industry, with Olympic triumphs the cornerstone of that effort. Xi, reportedly a soccer enthusiast who presides over 48 soccer fields at the Evergrande football school, is encouraging Chinese investors to snap up any teams that come on the market, a Cleats and Balls version of his Belt and Road initiative. A Chinese club was disappointed when Ronaldo turned down its $105 million per year offer to join it. “The drive to match China’s economic ascent with success on the soccer field has become emblematic of Mr. Xi’s ambition to transform China into a great and confident power…. The government has poured the kind of concentrated effort into soccer that it previously has devoted to winning Olympic medals in individual sports…,” notes The New York Times.
The regime operates 2,000 government-run schools for athletes, selected at a tender age, and separated from their families. China focuses on minor sports that are under-funded in America (female weight-lifting, badminton) and the West, but bestow gold medals. Gou Zhongwen, head of the Chinese Olympic Committee, says, “We must resolutely ensure we are first in gold medals.” That win would take the sting out of the US 39-38 victory in Tokyo’s summer Olympics earlier this year.
Matched against that state-funded and managed system are American athletes, dependent on a complex system of private-sector contributions, living in a free society neither willing nor capable of imposing on its young athletes the draconian regime of its communist rival.
Biden Leads A Diplomatic Boycott
Xi knows that President Biden’s decision to have his officials boycott the games to protest China’s human rights abuses is unhelpful to China’s drive for international legitimacy, especially since several countries are adopting a similar policy that signals to the Chinese public that its regime is not considered entirely respectable in international circles. Biden’s critics preferred that he bar America’s athletes from participating in the games, but judging from the pained reaction of the Chinese regime, Biden’s move has been somewhat effective. “Grandstanding … Politicizing sports is against the Olympic spirit,” sniffed foreign ministry spokesman Zhao Lijan. He promised the U.S. “would pay a price” for its decision.
More Than Gold At Stake
At stake in this battle is perhaps the biggest economic prize of all. Up for grabs is leadership in setting the rules of the global trading regime.
America continues to back a rules-based trading order, China to ignore World Trade Organization rules.
America is committed (sort of) to the continued independence of its major chip supplier, Taiwan, while China intends to do to Taiwan, which it is allowing to compete in the Olympics only as “Chinese Taipei”, what it has done to Hong Kong.
American policy aims at reducing carbon emissions, China continues the construction of new coal-fired generating stations.
America wants other countries to continue to recognise the dollar as the world’s reserve currency; China wants to replace it with the yuan.
American policy is to pressure China to end its human rights violations. Beijing has required the IOC to delete contract clauses that oblige the host city “to respect, protect and fulfil human rights and fundamental freedoms”. The clause will reappear in the contract with Paris for the 2024 games
Enjoy the games. But as you watch the broadcasts, keep in mind that the competition for gold medals is part of a broader war to shape the world in which we will live. The athletic contests are war by other means.