Self-confidence is a beautiful thing, but it can also be destructive – especially when it is not appropriate. The West risks becoming isolated or isolating itself “because we believe so much in our own standards or the truth of our own standards” – as academic Moritz Rudolf puts it in an interview with Michael Radunski. Rudolf, who will take up his position as China Fellow at the EU’s internal think tank I.D.E.A. on Wednesday, talks about the urgently needed reform of the UN, how China envisions the new world order, and how systematically the country’s leaders are working to implement it. Above all, however, Rudolf summarizes what Western countries need to do to represent their own interests – but have so far failed to do so.
Chinese players are also very active in other areas: When it comes to international sporting events, brands from the People’s Republic are currently replacing the previously ubiquitous sponsor names. These companies are often global market leaders in their sector, yet only one in ten people here have heard of them. This is supposed to change, and the companies are spending millions on it. Christiane Kuehl analyzes the upheaval in the competitive sports business.
Have a pleasant start to the day and always have the right amount of self-confidence.
China’s president proposes one global initiative after the other. Sometimes, it’s about global security, then about global development, and another time about global civilization. Should such a hodgepodge be taken seriously?
These initiatives must absolutely be taken seriously. Just by looking at Xi Jinping’s choice of words, we must realize how big his goals are. Xi calls it the community of common destiny. Over the years, several initiatives have emerged under this term. If we want to understand how China intends to reshape the global order, these initiatives are the best we have, as they stem directly from Xi Jinping’s thinking.
What is the idea behind the initiatives?
It is about an order that is no longer shaped by the West. Our global order is a reflection of Western power advantages after the Second World War. China now wants to show that this order needs a kind of update.
Germany also says that the UN urgently needs to be reformed. Don’t we want the same thing?
The problem is that we are coming from different directions. The German and European view is rather defensive: If we don’t reform the order now, it will break – and that would be fatal.
And the Chinese view?
The Chinese side is more offensive and says: The way it is now, our own interests are not adequately represented. That’s why they want this order to be adapted to reality.
Then, the starting position is different, but we can agree on the goal.
Not only can we do it, we have to. If we don’t, the Chinese will seek such talks with others. Then, they will set up their own standards with other countries. But this will no longer reflect our economic and political interests.
Why are we not seeking this dialogue?
I’m afraid it’s because we’ve taken a very superficial approach to this topic so far. Perhaps also out of a lack of interest. I understand that, it’s very abstract. But while we largely ignore the topic, it is a priority area for the Chinese.
How can you tell?
When I was at the UN in 2019, in the Donald Trump era, the United States had one person sitting in the room in some rounds, if at all. Germany had maybe three, the Indians two. And the Chinese showed up with ten people, six of whom were absolute experts on the respective conference topic. China is currently building up extensive expertise in many areas. It’s a sort of tsunami that’s rushing towards us. The Chinese know our arguments, but above all, they know their own arguments. Then they also manage to get relevant third countries on their side. And then we are left out of the equation.
But with Xi Jinping, everything sounds so benign: the community of common destiny. Safety and development for all. That’s great.
We should not allow ourselves to be blinded, there are strong vested interests behind this. The Communist Party has understood that you can’t just look inward on the way to becoming a developed country; you also need global resources. It is necessary to export one’s own standards. They have realized this: To achieve this, you sometimes have to act benevolently. That’s how you win alliances. Look at their health diplomacy during the COVID-19 pandemic and how China has attempted to gain partners through supposedly selfless behavior.
That backfired severely in some cases. How did that go down in the third countries?
Naturally, they are trying to profit from these two different systems. They know that the Americans provide security. But they have long waited in vain for the West when it comes to issues such as development or investment. And now there are the Chinese. Then they say what the Chinese want in exchange for finally building that important bridge or rolling out a functioning internet.
How dangerous is it if we don’t deal with China’s advances?
We will have problems if other countries adopt China’s language. There are already trends here. At the same time, we cannot provide our own concrete answers. Attempts are being made in development cooperation, such as the US’ Build Back Better World (BBBW) or the Europeans’ Global Gateway. But we are slow and always come second.
Are we being taken by surprise?
Yes, and not only that. We may become isolated or isolate ourselves because we believe so much in our own standards or the truth of our own standards. They are right, of course. But to bring the other countries on board, we need to know what the Chinese side is discussing with the other countries, what they are concerned about and what they want to participate in. In order to have a functioning China policy, we need to understand what is happening right now and systematically assess it.
Are we underestimating Chinese efforts?
I think so. Yes, unfortunately. A big mistake.
Why is that?
Because it appears so abstract. Because the Chinese are not presenting a finished draft treaty that describes how they want the world to be. Instead, it’s about abstract principles, some of which are even contradictory, which delve into gray areas, but into which China is increasingly pushing. All of this is simply extremely difficult for German legal experts to grasp.
And where is the UN in all of this?
China is still trying to introduce its ideas into the UN system. These Chinese initiatives, such as the Global Development Initiative, are linked to UNEP and the UN’s 2030 development goals. They are trying to take advantage of the system and reform it so that it becomes more Chinese.
And if that doesn’t work …
… then they build parallel structures, regional structures. The Chinese side has the luxury of being able to do both simultaneously, and this increases the room for maneuver.
Is this our chance? To take up China’s ideas and integrate them into the UN system for our benefit, because otherwise, we will one day lose our seat at the table?
Absolutely, also to counteract it. I know it’s extremely difficult, that’s absolutely clear. But what the UN is right now is better than anything else that will come. No matter what comes next, we will never again have a system in which our interests and ideas are so strongly represented.
Moritz Rudolf is a researcher at the Paul Tsai China Center at Yale Law School, where he focuses on the impact of China’s rise on the international legal system. In February, he will join I.D.E.A., the internal EU think tank of EU Commission President Ursula von der Leyen, as a China Fellow.
China’s big corporations increasingly rely on large-scale sports sponsorship to raise their global profile. More and more of them are ready to put big money on the tables of football associations such as UEFA and FIFA or the International Olympic Committee (IOC). These companies are highly successful in global competition, and many are market leaders. And yet, these brands are largely unknown in the West. According to media reports in November 2023, only ten percent of respondents to a European representative survey said they had heard of China’s EV market leader, BYD, which is currently entering the European market. This is supposed to change.
For example, 1573: Many viewers at the recent Australian Open in Melbourne probably wondered what the four numbers, followed by Chinese characters, displayed on the perimeter boards of the tennis courts meant. Zheng Qinwen, the surprise finalist at the first Grand Slam tournament of the season from China, probably knows the answer: 1573 is a liquor brand of the Chinese company Luzhou Laojiao, which has sponsored the tournament since 2019 as “Official Baijiu Partner” as the tournament organizers call it. The Australian Open recently renewed the partnership for another five years in December 2023: “Luzhou Laojiao will continue benefitting from global exposure and brand engagement through the Australian Open partnership,” the tournament organizers announced.
Richard Heaselgrave, Chief Revenue Officer of Tennis Australia, said at the beginning of the sponsorship deal that the contract with Luzhou Laojiao was “one of the largest deals that Tennis Australia has ever negotiated.” However, he did not mention how much the deal was worth. And the Australian Open did not disclose a figure for the renewal either. The name of the liquor, 1573, refers to the distillery’s founding year during the Ming Dynasty.
The new sponsor of the European football association UEFA can hope for a big publicity boost: BYD. In January, UEFA announced BYD as the official car partner for the 2024 European Football Championship in Germany. “The world’s leading new energy vehicles manufacturer will provide electric cars for various stakeholders,” UEFA announced – explicitly mentioning BYD’s leading market position, which the company only achieved in the fourth quarter of 2023. Ultimately, the UEFA pats itself on the shoulder with this move. “BYD’s sponsorship aligns with UEFA’s goal to organize a greener and more sustainable UEFA EURO 2024.”
BYD replaces the former UEFA car partner Volkswagen; the German company decided in September 2023 not to renew the contract despite the European championship being held in Germany. UEFA will now have the European championship sponsored by a non-European manufacturer for the first time.
The UEFA deal is a real coup for BYD, enabling the Shenzhen-based company to be present at a mega event in Germany, Europe’s most challenging car market. And it comes at precisely the moment when the company sets out to tap into the European market – despite all the debates about possible punitive tariffs on Chinese EVs.
“BYD’s latest innovations in electric cars used by UEFA will be showcased at many venues,” BYD announced, calling the EURO 2024 an influential platform.
Parallel to their growing international ambitions, the benefits of sponsoring major sporting events are increasing for Chinese companies. The online retailer Alibaba’s payment platform Alipay, the short video app TikTok, the smartphone brand Vivo and the TV manufacturer Hisense have already sponsored the Euro 2020 (which was not held until 2021 due to Covid). TikTok also sponsored the 2022 European Women’s Championship in the UK, but will no longer sponsor the men’s event in 2024. All other companies also have contracts for 2024.
Details about each deal are scarce. In late 2022, shortly after the World Cup in Qatar, the state-run Global Times boasted that China was the largest tournament sponsor, with a total volume of 1.4 billion US dollars. Hisense, Vivo, the Wanda Group and the dairy company Mengniu were direct FIFA sponsors. There were also deals with some national teams: World champion Argentina was sponsored by eight Chinese brands, including the car joint venture GAC Mitsubishi Motors, as well as lesser-known names such as Panpan Foods and Cotti Coffee.
In parallel, the brands also use sponsorship to serve their home market: China’s sports and, above all, football enthusiasts, who watch the German Bundesliga, Champions League, and, of course, the World Cup and European Championship live on television. The signs 支付宝 flickered on the boards at Euro 2020 – Zhi Fu Bao, the Chinese name for Alipay, which is in constant competition with Tencent’s WeChat Pay in China. Even in the German football league, perimeter advertising by Chinese companies has been commonplace for years.
The marketing goals of these companies also supplement President Xi Jinping’s ambition to make China a leading football nation by 2050 and to host the World Cup one day. To this end, he has ordered football to be added to the sports curriculum in all schools. However, the road to sporting success is a rocky one. At last week’s Asian Championships, the national team lost in the preliminary round to Tajikistan and Lebanon. China is currently 79th in the world rankings, while its women are 19th.
Incidentally, a renowned football club had previously shown interest in a sponsorship agreement with BYD: Arsenal London formally presented the car manufacturer as a new sponsor in April 2018. However, BYD responded that it knew nothing about it. The English Premier League club had fallen victim to scammers who allegedly signed fake deals in the name of BYD for years. Among other things, BYD pressed charges for forging the company stamp, which can be used instead of a signature in China. The latest deal with UEFA, however, is genuine.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Europe’s solar panel manufacturing industry has urged the European Union to step in with emergency measures to avoid local firms shutting down under price pressure from Chinese imports. “Over the next 4-8 weeks, major EU PV module producers and their European suppliers are poised to shut down manufacturing lines unless substantial emergency measures are promptly implemented,” states the letter from the industry association the European Solar Manufacturing Council (ESMC) to EU Commission President Ursula von der Leyen. Without rapid help, the EU risked losing more than half of its operational solar photovoltaic module manufacturing capacity within weeks. The letter is available to Reuters.
The European solar industry has come under severe pressure since last summer due to a slump in prices, triggered primarily by a flood of cheap Chinese solar modules. These have partly piled up in European warehouses and thus depressed prices. China holds a 90 percent share of the global market for solar systems.
ESMC asked the EU to launch emergency measures, including a scheme to buy up excess inventories of EU solar modules to ease the oversupply and change state aid rules to boost government support for local solar producers. If those measures cannot be done rapidly, the EU should also consider “safeguard” measures that could include tariffs and quotas to counter a surge of imports, the letter said. This could also include tariffs and quotas. However, many solar manufacturers reject higher tariffs as damaging to the market. ck/rtr
China is at a critical juncture. Its deflation-prone debt-intensive economy is seriously underperforming. Its government has become embroiled in a major superpower conflict with the United States. And it is staring down the barrel of a demographic crisis. Worst of all, Chinese authorities are responding to these challenges more with ideology and stale tactics from the past, rather than with breakthrough reforms. Imaginative solutions to tough problems are in scarce supply.
As a diehard China optimist for most of the past 25 years, I haven’t come to this conclusion lightly. My Yale course, “The Next China,” made the case for a powerful shift in the Chinese growth model, from an investment- and export-led economy to one driven by domestic consumption.
Yes, I worried that China’s porous social safety net – both for retirement and health care – could lead to a rise in fear-driven precautionary saving that would inhibit consumer demand. But, viewing these concerns more as challenges than risks, I remained convinced that China would ultimately rebalance its economy.
I began to have serious doubts in 2021, when Chinese regulators clamped down on internet-platform companies. With this assault taking dead aim at entrepreneurs, I warned of a mounting “animal spirits deficit.” In my latest book, Accidental Conflict, I widened my concerns to include the implications of President Xi Jinping’s “common prosperity” campaign, which targeted the wealth creation of Chinese risk-takers. And then, a year ago, I threw in the proverbial towel; in “A China Optimist’s Lament,” I argued that the government’s newfound fixation on national security would further diminish China’s potential for economic dynamism.
I have taken a fair amount of flak for this change of heart, especially from long-biased US politicians and their media consorts. Surprisingly, the Chinese have been more open to debate, especially over the possibility that the Next China is starting to look more like the Next Japan. After discussing these concerns with a wide range of senior officials, business leaders, academics, former students, and friends in a series of visits to China over the past few months, three conclusions emerge:
First, the Chinese policy response to a flagging economy is unenlightened. The government is relying on what it has long called “proactive fiscal stimulus and prudent monetary policy” to support economic growth of around 5 in 2024 (Premier Li Qiang will officially announce the target at the National People’s Congress in March). As was the case in the aftermath of the Asian financial crisis of 1997-98 and the 2008 global financial crisis, China is once again resorting to the brute force of large cash infusions to address today’s major dislocations in the property market, local-government financing vehicles, and the stock market.
Second, such short-term countercyclical tactics do not effectively address China’s long-term structural problems. According to estimates by the United Nations, China’s working-age population peaked in 2015 and will decline by nearly 220 million by 2049. Basic economics tells us that maintaining steady GDP growth with fewer workers requires extracting more value-added from each one, meaning that productivity growth is vital. But with China now drawing more support from low-productivity state-owned enterprises, and with the higher-productivity private sector remaining under intense regulatory pressure, the prospects for an acceleration of productivity growth appear dim.
Lastly, the government keeps sharpening its focus on internal security. This is true of recent anti-corruption efforts aimed at the military, as well as the on-again, off-again, and now back on-again regulatory assault on the private sector. For example, the gaming industry is once more under scrutiny, as are several high-profile foreign executives. Moreover, the recently concluded Third Plenum of China’s Central Commission for Discipline Inspection underscored the importance of ideological discipline as a foundational value. To that end, the Communist Party has effectively taken over some of the country’s leading educational institutions, including Tsinghua, Shanghai Jiaotong, Nanjing, and Fuzhou Universities.
I worry most about Chinese productivity, especially as aging now takes a toll on its workforce. Productivity is just as important for China’s market-based socialist system as it is for a capitalist economy. Academics have drawn attention to several prominent sources of productivity growth – technology, investment in human capital, research and development, and inter-industry shifts in the mix of national output. The late Robert Solow, the inventor of modern growth theory, put it best, framing productivity is as a “residual” proxy for technological progress after accounting for the physical contributions to output made by labor and capital.
Paul Krugman, in a celebrated 1994 Foreign Affairs article, brought the Solow growth-accounting framework to life in stressing the contrast between perspiration and inspiration in driving economic development. The vaunted performance of the fast-growing East Asian tigers, Krugman argued, reflected the perspiration of “catch-up” growth achieved by building new capacity and bringing workers from low-productivity rural areas to higher-productivity cities. In a prescient warning of the Asian financial crisis, Krugman stressed that these economies ultimately failed to follow through on the inspirational genius imbedded in the Solow productivity residual – call it a lack of imagination.
My last three visits to China have led me to a similar conclusion. The Chinese leadership is suffering from an increasingly worrisome imagination deficit. Their deeply entrenched countercyclical policy mindset is at odds with mounting deflationary risks, exacerbated by the lethal interplay between a rapidly aging population and serious productivity problems. At the same time, the government is stifling innovation through a barrage of regulations, attempting to draw inspiration from ideology. Without a more imaginative approach to economic stewardship, China could remain stuck, unable to muster the courage that its reformers drew on so successfully in the past.
Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022).
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Many Chinese have already returned to their hometowns. Now it’s time for the New Year decorations. These mainly include Chun Lian 春联: red paper strips with golden characters, hung on the door frame. They wish good luck and prosperity. Traditionally, people used to write their own Chuan Lian with a brush. Today, they are mass-produced goods available in supermarkets or large online retailers – like the one that a young man in Yongxi near Chongqing is sticking on the front of his house.
Self-confidence is a beautiful thing, but it can also be destructive – especially when it is not appropriate. The West risks becoming isolated or isolating itself “because we believe so much in our own standards or the truth of our own standards” – as academic Moritz Rudolf puts it in an interview with Michael Radunski. Rudolf, who will take up his position as China Fellow at the EU’s internal think tank I.D.E.A. on Wednesday, talks about the urgently needed reform of the UN, how China envisions the new world order, and how systematically the country’s leaders are working to implement it. Above all, however, Rudolf summarizes what Western countries need to do to represent their own interests – but have so far failed to do so.
Chinese players are also very active in other areas: When it comes to international sporting events, brands from the People’s Republic are currently replacing the previously ubiquitous sponsor names. These companies are often global market leaders in their sector, yet only one in ten people here have heard of them. This is supposed to change, and the companies are spending millions on it. Christiane Kuehl analyzes the upheaval in the competitive sports business.
Have a pleasant start to the day and always have the right amount of self-confidence.
China’s president proposes one global initiative after the other. Sometimes, it’s about global security, then about global development, and another time about global civilization. Should such a hodgepodge be taken seriously?
These initiatives must absolutely be taken seriously. Just by looking at Xi Jinping’s choice of words, we must realize how big his goals are. Xi calls it the community of common destiny. Over the years, several initiatives have emerged under this term. If we want to understand how China intends to reshape the global order, these initiatives are the best we have, as they stem directly from Xi Jinping’s thinking.
What is the idea behind the initiatives?
It is about an order that is no longer shaped by the West. Our global order is a reflection of Western power advantages after the Second World War. China now wants to show that this order needs a kind of update.
Germany also says that the UN urgently needs to be reformed. Don’t we want the same thing?
The problem is that we are coming from different directions. The German and European view is rather defensive: If we don’t reform the order now, it will break – and that would be fatal.
And the Chinese view?
The Chinese side is more offensive and says: The way it is now, our own interests are not adequately represented. That’s why they want this order to be adapted to reality.
Then, the starting position is different, but we can agree on the goal.
Not only can we do it, we have to. If we don’t, the Chinese will seek such talks with others. Then, they will set up their own standards with other countries. But this will no longer reflect our economic and political interests.
Why are we not seeking this dialogue?
I’m afraid it’s because we’ve taken a very superficial approach to this topic so far. Perhaps also out of a lack of interest. I understand that, it’s very abstract. But while we largely ignore the topic, it is a priority area for the Chinese.
How can you tell?
When I was at the UN in 2019, in the Donald Trump era, the United States had one person sitting in the room in some rounds, if at all. Germany had maybe three, the Indians two. And the Chinese showed up with ten people, six of whom were absolute experts on the respective conference topic. China is currently building up extensive expertise in many areas. It’s a sort of tsunami that’s rushing towards us. The Chinese know our arguments, but above all, they know their own arguments. Then they also manage to get relevant third countries on their side. And then we are left out of the equation.
But with Xi Jinping, everything sounds so benign: the community of common destiny. Safety and development for all. That’s great.
We should not allow ourselves to be blinded, there are strong vested interests behind this. The Communist Party has understood that you can’t just look inward on the way to becoming a developed country; you also need global resources. It is necessary to export one’s own standards. They have realized this: To achieve this, you sometimes have to act benevolently. That’s how you win alliances. Look at their health diplomacy during the COVID-19 pandemic and how China has attempted to gain partners through supposedly selfless behavior.
That backfired severely in some cases. How did that go down in the third countries?
Naturally, they are trying to profit from these two different systems. They know that the Americans provide security. But they have long waited in vain for the West when it comes to issues such as development or investment. And now there are the Chinese. Then they say what the Chinese want in exchange for finally building that important bridge or rolling out a functioning internet.
How dangerous is it if we don’t deal with China’s advances?
We will have problems if other countries adopt China’s language. There are already trends here. At the same time, we cannot provide our own concrete answers. Attempts are being made in development cooperation, such as the US’ Build Back Better World (BBBW) or the Europeans’ Global Gateway. But we are slow and always come second.
Are we being taken by surprise?
Yes, and not only that. We may become isolated or isolate ourselves because we believe so much in our own standards or the truth of our own standards. They are right, of course. But to bring the other countries on board, we need to know what the Chinese side is discussing with the other countries, what they are concerned about and what they want to participate in. In order to have a functioning China policy, we need to understand what is happening right now and systematically assess it.
Are we underestimating Chinese efforts?
I think so. Yes, unfortunately. A big mistake.
Why is that?
Because it appears so abstract. Because the Chinese are not presenting a finished draft treaty that describes how they want the world to be. Instead, it’s about abstract principles, some of which are even contradictory, which delve into gray areas, but into which China is increasingly pushing. All of this is simply extremely difficult for German legal experts to grasp.
And where is the UN in all of this?
China is still trying to introduce its ideas into the UN system. These Chinese initiatives, such as the Global Development Initiative, are linked to UNEP and the UN’s 2030 development goals. They are trying to take advantage of the system and reform it so that it becomes more Chinese.
And if that doesn’t work …
… then they build parallel structures, regional structures. The Chinese side has the luxury of being able to do both simultaneously, and this increases the room for maneuver.
Is this our chance? To take up China’s ideas and integrate them into the UN system for our benefit, because otherwise, we will one day lose our seat at the table?
Absolutely, also to counteract it. I know it’s extremely difficult, that’s absolutely clear. But what the UN is right now is better than anything else that will come. No matter what comes next, we will never again have a system in which our interests and ideas are so strongly represented.
Moritz Rudolf is a researcher at the Paul Tsai China Center at Yale Law School, where he focuses on the impact of China’s rise on the international legal system. In February, he will join I.D.E.A., the internal EU think tank of EU Commission President Ursula von der Leyen, as a China Fellow.
China’s big corporations increasingly rely on large-scale sports sponsorship to raise their global profile. More and more of them are ready to put big money on the tables of football associations such as UEFA and FIFA or the International Olympic Committee (IOC). These companies are highly successful in global competition, and many are market leaders. And yet, these brands are largely unknown in the West. According to media reports in November 2023, only ten percent of respondents to a European representative survey said they had heard of China’s EV market leader, BYD, which is currently entering the European market. This is supposed to change.
For example, 1573: Many viewers at the recent Australian Open in Melbourne probably wondered what the four numbers, followed by Chinese characters, displayed on the perimeter boards of the tennis courts meant. Zheng Qinwen, the surprise finalist at the first Grand Slam tournament of the season from China, probably knows the answer: 1573 is a liquor brand of the Chinese company Luzhou Laojiao, which has sponsored the tournament since 2019 as “Official Baijiu Partner” as the tournament organizers call it. The Australian Open recently renewed the partnership for another five years in December 2023: “Luzhou Laojiao will continue benefitting from global exposure and brand engagement through the Australian Open partnership,” the tournament organizers announced.
Richard Heaselgrave, Chief Revenue Officer of Tennis Australia, said at the beginning of the sponsorship deal that the contract with Luzhou Laojiao was “one of the largest deals that Tennis Australia has ever negotiated.” However, he did not mention how much the deal was worth. And the Australian Open did not disclose a figure for the renewal either. The name of the liquor, 1573, refers to the distillery’s founding year during the Ming Dynasty.
The new sponsor of the European football association UEFA can hope for a big publicity boost: BYD. In January, UEFA announced BYD as the official car partner for the 2024 European Football Championship in Germany. “The world’s leading new energy vehicles manufacturer will provide electric cars for various stakeholders,” UEFA announced – explicitly mentioning BYD’s leading market position, which the company only achieved in the fourth quarter of 2023. Ultimately, the UEFA pats itself on the shoulder with this move. “BYD’s sponsorship aligns with UEFA’s goal to organize a greener and more sustainable UEFA EURO 2024.”
BYD replaces the former UEFA car partner Volkswagen; the German company decided in September 2023 not to renew the contract despite the European championship being held in Germany. UEFA will now have the European championship sponsored by a non-European manufacturer for the first time.
The UEFA deal is a real coup for BYD, enabling the Shenzhen-based company to be present at a mega event in Germany, Europe’s most challenging car market. And it comes at precisely the moment when the company sets out to tap into the European market – despite all the debates about possible punitive tariffs on Chinese EVs.
“BYD’s latest innovations in electric cars used by UEFA will be showcased at many venues,” BYD announced, calling the EURO 2024 an influential platform.
Parallel to their growing international ambitions, the benefits of sponsoring major sporting events are increasing for Chinese companies. The online retailer Alibaba’s payment platform Alipay, the short video app TikTok, the smartphone brand Vivo and the TV manufacturer Hisense have already sponsored the Euro 2020 (which was not held until 2021 due to Covid). TikTok also sponsored the 2022 European Women’s Championship in the UK, but will no longer sponsor the men’s event in 2024. All other companies also have contracts for 2024.
Details about each deal are scarce. In late 2022, shortly after the World Cup in Qatar, the state-run Global Times boasted that China was the largest tournament sponsor, with a total volume of 1.4 billion US dollars. Hisense, Vivo, the Wanda Group and the dairy company Mengniu were direct FIFA sponsors. There were also deals with some national teams: World champion Argentina was sponsored by eight Chinese brands, including the car joint venture GAC Mitsubishi Motors, as well as lesser-known names such as Panpan Foods and Cotti Coffee.
In parallel, the brands also use sponsorship to serve their home market: China’s sports and, above all, football enthusiasts, who watch the German Bundesliga, Champions League, and, of course, the World Cup and European Championship live on television. The signs 支付宝 flickered on the boards at Euro 2020 – Zhi Fu Bao, the Chinese name for Alipay, which is in constant competition with Tencent’s WeChat Pay in China. Even in the German football league, perimeter advertising by Chinese companies has been commonplace for years.
The marketing goals of these companies also supplement President Xi Jinping’s ambition to make China a leading football nation by 2050 and to host the World Cup one day. To this end, he has ordered football to be added to the sports curriculum in all schools. However, the road to sporting success is a rocky one. At last week’s Asian Championships, the national team lost in the preliminary round to Tajikistan and Lebanon. China is currently 79th in the world rankings, while its women are 19th.
Incidentally, a renowned football club had previously shown interest in a sponsorship agreement with BYD: Arsenal London formally presented the car manufacturer as a new sponsor in April 2018. However, BYD responded that it knew nothing about it. The English Premier League club had fallen victim to scammers who allegedly signed fake deals in the name of BYD for years. Among other things, BYD pressed charges for forging the company stamp, which can be used instead of a signature in China. The latest deal with UEFA, however, is genuine.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Europe’s solar panel manufacturing industry has urged the European Union to step in with emergency measures to avoid local firms shutting down under price pressure from Chinese imports. “Over the next 4-8 weeks, major EU PV module producers and their European suppliers are poised to shut down manufacturing lines unless substantial emergency measures are promptly implemented,” states the letter from the industry association the European Solar Manufacturing Council (ESMC) to EU Commission President Ursula von der Leyen. Without rapid help, the EU risked losing more than half of its operational solar photovoltaic module manufacturing capacity within weeks. The letter is available to Reuters.
The European solar industry has come under severe pressure since last summer due to a slump in prices, triggered primarily by a flood of cheap Chinese solar modules. These have partly piled up in European warehouses and thus depressed prices. China holds a 90 percent share of the global market for solar systems.
ESMC asked the EU to launch emergency measures, including a scheme to buy up excess inventories of EU solar modules to ease the oversupply and change state aid rules to boost government support for local solar producers. If those measures cannot be done rapidly, the EU should also consider “safeguard” measures that could include tariffs and quotas to counter a surge of imports, the letter said. This could also include tariffs and quotas. However, many solar manufacturers reject higher tariffs as damaging to the market. ck/rtr
China is at a critical juncture. Its deflation-prone debt-intensive economy is seriously underperforming. Its government has become embroiled in a major superpower conflict with the United States. And it is staring down the barrel of a demographic crisis. Worst of all, Chinese authorities are responding to these challenges more with ideology and stale tactics from the past, rather than with breakthrough reforms. Imaginative solutions to tough problems are in scarce supply.
As a diehard China optimist for most of the past 25 years, I haven’t come to this conclusion lightly. My Yale course, “The Next China,” made the case for a powerful shift in the Chinese growth model, from an investment- and export-led economy to one driven by domestic consumption.
Yes, I worried that China’s porous social safety net – both for retirement and health care – could lead to a rise in fear-driven precautionary saving that would inhibit consumer demand. But, viewing these concerns more as challenges than risks, I remained convinced that China would ultimately rebalance its economy.
I began to have serious doubts in 2021, when Chinese regulators clamped down on internet-platform companies. With this assault taking dead aim at entrepreneurs, I warned of a mounting “animal spirits deficit.” In my latest book, Accidental Conflict, I widened my concerns to include the implications of President Xi Jinping’s “common prosperity” campaign, which targeted the wealth creation of Chinese risk-takers. And then, a year ago, I threw in the proverbial towel; in “A China Optimist’s Lament,” I argued that the government’s newfound fixation on national security would further diminish China’s potential for economic dynamism.
I have taken a fair amount of flak for this change of heart, especially from long-biased US politicians and their media consorts. Surprisingly, the Chinese have been more open to debate, especially over the possibility that the Next China is starting to look more like the Next Japan. After discussing these concerns with a wide range of senior officials, business leaders, academics, former students, and friends in a series of visits to China over the past few months, three conclusions emerge:
First, the Chinese policy response to a flagging economy is unenlightened. The government is relying on what it has long called “proactive fiscal stimulus and prudent monetary policy” to support economic growth of around 5 in 2024 (Premier Li Qiang will officially announce the target at the National People’s Congress in March). As was the case in the aftermath of the Asian financial crisis of 1997-98 and the 2008 global financial crisis, China is once again resorting to the brute force of large cash infusions to address today’s major dislocations in the property market, local-government financing vehicles, and the stock market.
Second, such short-term countercyclical tactics do not effectively address China’s long-term structural problems. According to estimates by the United Nations, China’s working-age population peaked in 2015 and will decline by nearly 220 million by 2049. Basic economics tells us that maintaining steady GDP growth with fewer workers requires extracting more value-added from each one, meaning that productivity growth is vital. But with China now drawing more support from low-productivity state-owned enterprises, and with the higher-productivity private sector remaining under intense regulatory pressure, the prospects for an acceleration of productivity growth appear dim.
Lastly, the government keeps sharpening its focus on internal security. This is true of recent anti-corruption efforts aimed at the military, as well as the on-again, off-again, and now back on-again regulatory assault on the private sector. For example, the gaming industry is once more under scrutiny, as are several high-profile foreign executives. Moreover, the recently concluded Third Plenum of China’s Central Commission for Discipline Inspection underscored the importance of ideological discipline as a foundational value. To that end, the Communist Party has effectively taken over some of the country’s leading educational institutions, including Tsinghua, Shanghai Jiaotong, Nanjing, and Fuzhou Universities.
I worry most about Chinese productivity, especially as aging now takes a toll on its workforce. Productivity is just as important for China’s market-based socialist system as it is for a capitalist economy. Academics have drawn attention to several prominent sources of productivity growth – technology, investment in human capital, research and development, and inter-industry shifts in the mix of national output. The late Robert Solow, the inventor of modern growth theory, put it best, framing productivity is as a “residual” proxy for technological progress after accounting for the physical contributions to output made by labor and capital.
Paul Krugman, in a celebrated 1994 Foreign Affairs article, brought the Solow growth-accounting framework to life in stressing the contrast between perspiration and inspiration in driving economic development. The vaunted performance of the fast-growing East Asian tigers, Krugman argued, reflected the perspiration of “catch-up” growth achieved by building new capacity and bringing workers from low-productivity rural areas to higher-productivity cities. In a prescient warning of the Asian financial crisis, Krugman stressed that these economies ultimately failed to follow through on the inspirational genius imbedded in the Solow productivity residual – call it a lack of imagination.
My last three visits to China have led me to a similar conclusion. The Chinese leadership is suffering from an increasingly worrisome imagination deficit. Their deeply entrenched countercyclical policy mindset is at odds with mounting deflationary risks, exacerbated by the lethal interplay between a rapidly aging population and serious productivity problems. At the same time, the government is stifling innovation through a barrage of regulations, attempting to draw inspiration from ideology. Without a more imaginative approach to economic stewardship, China could remain stuck, unable to muster the courage that its reformers drew on so successfully in the past.
Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022).
Copyright: Project Syndicate, 2024.
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Many Chinese have already returned to their hometowns. Now it’s time for the New Year decorations. These mainly include Chun Lian 春联: red paper strips with golden characters, hung on the door frame. They wish good luck and prosperity. Traditionally, people used to write their own Chuan Lian with a brush. Today, they are mass-produced goods available in supermarkets or large online retailers – like the one that a young man in Yongxi near Chongqing is sticking on the front of his house.
