Politics trumps everything in China, so when all the top leaders gather in Beijing for their annual meetings, it’s worth paying attention. Sports is not – it must be stressed – a top priority at the “Two Sessions” or Lianghui, but it does get a mention every now and then. Below are the relevant moments from the week’s major speeches, plus some attempts to read the tea leaves.
The major headline coming out of China over the past few days has been the widely-expected confirmation that President Xi Jinping can now stay in power as long as he wants, abolishing the two-term limit (10 years) that was put in place post-Mao precisely to stop one man having too much power in the future. The long-term impact this will have on China has been hotly debated elsewhere, though, as I’ve said before, from a purely sporting perspective there is a positive to be drawn from the fact that China’s long-term football goals are now more likely to stay the course, since the prospect of a new leader who may not like the game is now several years further away.
However, another trend has been that the Communist Party has also grown in power through taking over state institutions, further making a mockery of the supposed separation between the government and the Chinese Football Association (CFA). Despite the fact that recent Chinese football reforms have sought to achieve exactly this separation, in reality the government/Party is all-powerful and still makes all the big decisions – in direct contravention of FIFA laws.
Word of warning: the rest of this is long and pretty dry, but it’s important to know how the sports industry fits into the rest of the political and economic landscape in China – and the implications therein.
Premier’s Work Report
Last week began with Premier Li Keqiang‘s 45-page government work report, essentially a review of all areas of the economy in 2017, plus a brief look ahead to 2018. Here’s where he mentioned sports:
“We have carried out Fitness-for-All programs, which are now in full swing; and Chinese athletes have excelled in competition.” (page 13)
Thirteen pages until the first mention of exercise, but it’s a solid one, demonstrating that the health of the nation is a still a central goal. It makes sense for several reasons, most obviously:
- A healthier population will reduce China’s healthcare bill by trillions
- More physical activity means more domestic consumption (see below)
- A healthier population is a happier population
Meanwhile, in reference to the second half of the statement, it’s true that China didn’t have the best Winter Olympics, winning just one gold medal, but there have been some promising signs elsewhere. Just this month, 28-year-old sprinter Su Bingtian won the silver medal at the World Indoor Championships in an Asian record of 6.42 seconds (with teammate Xie Zhenye in 4th). Given that only three men have ever run faster than Su over 60 meters, there are clear signs he is being groomed to become one of China’s next big sports stars.
“We will develop powerful new growth drivers.
We will create big, strong industrial clusters in emerging industries, implement the big data development action plan, step up next-generation artificial intelligence R&D and application, and do more to promote the Internet Plus model in many fields like medical care, eldercare, education, culture, and sports.” (page 23)
The title of this section – developing new economic drivers – is the whole reason China wants to push its sports industry. To simplify: as the economy has slowed from years of double-digit growth to a GDP target of 6.5% this year, the sports sector was singled out in October 2014 as one area that could see huge growth, becoming the largest sports industry in the world by 2025, worth – they hope – 5 trillion RMB ($800 billion).
The “Internet Plus” model – using the web and related technologies to maximize other industries – is a concept that first came from Premier Li’s work report exactly three years ago, and has been a stable of government speeches since. In other words, Internet + Sports ticks a lot of boxes.
“We will continue reforms in education, culture, and sports, fully unlocking society’s vast potential for development.” (page 29)
Reform has been another constant over the years, but this is not reform as the west knows it. At all. When China talks about political reform, it has no intention whatsoever of becoming a democracy. Likewise, when China talks about economic reform, don’t expect Beijing to tolerate a market-led liberal economy any time soon.
So when China talks about sports reforms, it means incremental improvements. Yao Ming, as the new head of the Chinese Basketball Association (CBA), has been able to modernize the league little by little, in terms of tweaking the schedule and bringing in some new sponsors, while the most eye-opening change involved dividing the national team in two, but he’s still had to fight against some entrenched interests. Meanwhile, on the soccer front, “reform” has meant – supposedly – a separation between the CFA and the government. However, while the CFA now has a little more freedom and a little fewer administrative hoops to jump through, when push comes to shove on the major issues, the state is still very much in control.
“We will strengthen the fundamental role of consumption in driving economic growth.
We will promote consumption upgrading and develop new forms and models of consumption… We will support private actors in providing more services in healthcare, elderly care, education, culture, and sports.” (page 34)
Again a mention of consumption, namely the rebalancing of the economy away from manufacturing and exports (i.e. Made-in-China goods shipped all around the world) to the Holy Grail of domestic consumption under which the population of 1.4 billion people consumes and spends enough of its own products, meaning China no longer has to rely so heavily on the rest of the world to buy its stuff. That is a huge reason why sports has been pushed so hard over the past 3+ years, but as you can see from this list, it’s just one of several areas the government has been keen to promote.
“We will make thorough preparations for the Beijing Winter Olympics and Paralympics. Multiple channels will be used to increase sports venues and facilities available for the general public. If our people are fit and healthy, are strengthening social morality, and are striving to succeed, our country is certain to thrive and progress toward prosperity.” (page 38)
Just one mention of the 2022 Olympics, which reinforces my earlier point that while sports gets a lot of headlines and is still seeing a lot of growth, it is way down the list of priorities for this government. That is simply because they have more important things to worry about like, say, keeping the people off the streets, avoiding a financial meltdown and taking control of the South China Sea. I’m being facetious, but the point is that, for all those who will tell you Xi Jinping is crazy about football and how that means sports is top of the list, you can be sure he isn’t sitting around wondering when Arsene Wenger will get the sack. Sports still have to follow the rules in China, but the rules aren’t being made because of sports – and that’s a big difference.
Re-read that final sentence above about striving and thriving. It’s straight out of the “harmonious society” playbook, by which I mean China simply does not fit into the western way of doing, planning, acting etc. Whether that is a good or bad thing is for others to decide, but these meetings reveal China’s core – and its core is very different indeed.
The National Development and Reform Commission’s (NDRC) Report on the Implementation of the 2017 plan for National Economic and Social Development
“Economic growth
The fundamental role of consumption in driving economic growth was continuously enhanced. Service consumption in well-being industries, such as tourism, culture, sports, health, elderly care, and education and training, further improved both in terms of quality and scale. Total retail sales of consumer goods grew by 10.2% in 2017, and the contribution of final consumption to economic growth reached 58.8%.” (page 2)
Following on from Li Keqiang’s report was a summary from the National Development and Reform Commission (NDRC), a macroeconomic planning agency focused on the Chinese economy. Right at the top of the NDRC’s report comes that “consumption as driving economic force” concept again. I’ve dealt with that above, but it’s important. I’ve also included the numbers in the final sentence here because data in China is always problematic. It is simply impossible to verify the vast majority of the data that comes out of China. That is not to say that Chinese data is all fake, but when China’s Premier himself reportedly told the US Ambassador in 2007 that provincial GDP numbers were unreliable and that he used other economic indicators to measure progress instead, it doesn’t exactly instill confidence in the Statistics Bureau.
To that point, I’m often asked about China’s goal for the sports industry of $800 billion by 2025 and whether it’s realistic. I’ve heard several people say that they think it’s reasonable or possibly even understated, but, in reality, there is absolutely no way to know for sure whether China is on course to achieve this or not, irrespective of what numbers get released.
“Consumption in Well-Being Industries
Tourism: Implemented the campaign on improving and upgrading rural tourism, supported the construction of facilities for farm-based recreation and rural tourism, improved the management system for motor homes, continued to encourage the development of cruise-liner and·yacht tours, and promoted the integrated development of sports and tourism.“
Sports and tourism as a pairing is interesting, because travel – both domestically and overseas – is another huge trend that has been witnessed over the past few years. Some recent stats:
- China’s international tourists spend around US$161bn a year on travel.
- Chinese travelers spend double the international average.
- More than 150 million mainland Chinese travelers ventured overseas last year. That is predicted to grow beyond 200 million annually in the next five years.
- About 4.3 billion holidays are taken every year by Chinese people within China itself.
Suddenly it makes sense why the Australian Open now markets itself as “The Grand Slam of Asia / Pacific” and why the French Open and Wimbledon also do their best to court Chinese fans. Chinese are going overseas in rapidly increasing numbers and, once there, they like to spend.
Of course, this is all money that is leaving China – not something that’s typically encouraged – but with more than 4 billion trips taken within China each year, the integration of sports and travel – heading up to one of China’s new ski resorts, for example – could be worth a huge amount to the domestic economy.
“Sports: Formulated development plans for sports industries such as marathons, cycling, and going on camping excursions by car, and provided support to non-governmental sectors in organizing large-scale sports events for the general public.” (page 3)
If football saw the first main wave of investment in the post-2014 sports industry drive, and winter sports encapsulated the second wave, then the so-called “mass-participation sports” have made up the third major wave. Marathons and related road races have increased from just 22 in 2011 to more than 400 last year, while cycling, swimming, triathlons and other more extreme races have all seen large participation boosts.
“Culture and Sports
More public sports complexes were opened up to the public for free or for a small fee. More non-profit public fitness activities were organized.” (page 25)
More comments about the wider population generally being healthy, which, as discussed above, fits into the government’s overall master plan. It’s also interesting to note the “non-profit” and, above, the “non-governmental” mentions, meaning that the private sector can take the lead here in certain areas – at least for now.
Considerations, Objectives, and Policies for Economic and Social Development in 2018
“We will continue the Ten Initiatives for Boosting Consumer Spending, support nongovernmental participants in providing medical, elderly care, educational, cultural, and sports services, and promote the integration of the internet into service sectors such as elderly care, medical services, housekeeping, and express delivery.” (page 51)
That’s no fewer than ten initiatives to spark the domestic economy. Yes, sports is in there, too, but so is everything else. Remember: when you read that Xi Jinping is a massive football fan with the implication that sports is therefore at the top of the government’s priority list, question how much the author really knows.
“We will implement the Fitness-for-All initiative, raise the popularity of community sports, and boost development of the sports industry.” (page 56)
I think we’ve covered this.
Ministry of Finance’s Report on the Execution of the Central and Local Budgets for 2017 and on the Draft of the Central and Local Budgets for 2018
Next up, the Ministry of Finance…
“We promoted the development of culture and sports. We sped up work on building a modern system of public cultural services. We made 49,863 public cultural facilities free to the public, made 1,257 sports facilities available free of charge or inexpensively for members of the public, and saw continued improvement in urban and rural public cultural and sports facilities.” (page 11)
Take a minute to look at the above chart, which shows the expected budgets for this year for various sectors of the economy. Culture sports and media collectively account for 28.1 billion RMB ($4.4 billion), up slightly from 27.1 billion RMB ($4.3 billion). It’s not an insignificant amount of money, but it’s far, far less than other items on the list, many of which don’t get nearly as many headlines. It’s also pretty small when compared with the figure of $790 billion, which is what China wants its sports industry to be worth seven years from now. Finally, “culture, sports and media” is pretty road and there’s no sense of which of those areas get the bulk of the money.
Until…
“Expenditures on culture, sports, and media from the· general public budgets were mainly used to improve the public cultural service system, implement the initiative to see culture benefit the people, help socialist culture and arts flourish and develop, strengthen the protection and proper use of cultural relics and the protection and passing on of cultural heritage, carry out public fitness activities, advance the development of the culture sector, etc.” (page 47)
Hmmm, well culture/cultural gets six mentions in that sentence vs. one sports and one fitness, so there your answer. In other words, even in a comparatively small area of the economy, sports still doesn’t stand out.
And that’s it. It may be that sports gets some more attention this week, in which case I’ll look to add to this, but with so much else going on at the top of the Chinese government at the moment, the sports sector may have to take a bit of a back seat for now.
Very interesting. Thank you
Thanks Phil!
nice …i love sports
Very Insightful