Qatar Recycles Its China Earnings

As an exercise in financial recycling, it is intriguing. Qatar is applying for a license to invest $5 billion of its earnings from selling liquefied gas to China in Chinese equities, including initial public offerings. Beijing likes the idea, promising to fast track the application of Qatar’s  sovereign wealth fund to be a qualified foreign institutional investor (QFII), despite the fact that such investors are currently subject to an investment quota of $1 billion.

That cap is anyway expected to be raised as part of Beijing’s step-by-step opening of the capital account. Some 37 QFIIs have applications pending to increase their quotas by an average of $340 million, following a increase in the aggregate quota to $80 billion from $50 billion. The stake that QFIIs could hold in a Chinese listed company collectively is also expected to be raised to 30% from 20%. As of mid-April, China had issued 170 QFII licences with 127 of them granted a combined quota of $25.2 billion. The requested increases in quota plus Qatar’s ask–which would make it the biggest foreign investor in China’s stock and bond markets–could potentially inject more than $17 billion into China’s sagging equity and debt markets. Do we hear the sound of fools rushing in?

When Will China Get A FIFA World Cup?

Where does FIFA’s award of the World Cup to Russia in 2018 and Qatar in 2022 leave China’s possible aspirations to host the 2026 tournament? We noted in July that the Chinese Football Association was considering the feasibility of a bid for 2026, despite its current tribulations and China’s relatively lowly standing in the football world. The CFA’s head, Wei Di, has now repeated that he favors China giving it a go.

In one sense both awards should give the Wei some encouragement. FIFA set great store in hosting its World Cups in countries where the tournament will give a boost to the game. Russia is a footballing power of long standing, but its football infrastructure is woefully antiquated and will need a thorough overhaul. Qatar, on the other hand, ranks even lower than China as a footballing nation, but bears the standard for the Middle East, a region that hitherto has not hosted the tournament.

FIFA’s informal continental rotation meant the 2022 tournament was always going to be awarded to an Asian nation. That is went to West Asia, and not to South Korea, Australia or Japan, the three other contenders, may leave the door open for an Asia-Pacific nation in 2026. Two East Asian World Cups in succession would have been out of the question.

Beijing hosted the 2008 Olympics with spectacular success, so FIFA should have little doubt that China can pull off staging its flagship event. The question will be is 2026 the right moment to endorse a world power that is not as yet a footballing one. While it is way to early to say, FIFA may first prefer to give a boost to the game in another Asia-Pacific nation, the U.S., and have China bide its time until 2030.