CHINESE AND U.S. trade negotiators resume high-level talks in Washington on Thursday. The run-up could scarcely be less promising.
On Monday, the U.S. blacklisted 28 Chinese organisations for their role in what the Trump administration alleges is repression of Uighurs in Xinjiang province. The 28, which include both government agencies and technology companies specialising in surveillance equipment, will be added to the Entity List, which means they will require U.S., government permission to purchase anything from U.S. companies.
This brings a human rights dimension to the trade talks that the Trump administration has mostly sought to keep at arm’s length. In June, U.S. President Donald Trump had told President Xi Jinping in a phone call that he would not condemn the protests in Hong Kong in order not to jeopardise the trade discussions.
Those injected themselves into the conversation regardless over the weekend after Daryl Morey, the general manager of the U.S. professional basketball team, the Houston Rockets of the National Basketball Association (NBA), on Friday evening tweeted his support for the Hong Kong protests. He deleted his tweet overnight, but that did not prevent a deluge of criticism and retaliation from China, and damnation of the NBA within the United States for what many there said was craven capitulation by the NBA to protect what is now its most important market. The Rockets are particularly popular in China as it is the team that made Yao Ming into a superstar.
The Rockets’ attempts to recover from that position has been no less unedifying. It will be intriguing to see how two NBA preseason games to be played in Shanghai and Shenzhen at the week are received.
The affair offers a clear example of Chinese retaliation — perhaps more accurately a chilling threat of retaliation — against a U.S. business expressing a political line unacceptable to Beijing. It also shows the levers of pressure authorities can apply in such circumstances to U.S. businesses that are increasingly dependent on the Chinese market for growth.
However, it underlines how the Trump administration’s tariff-centric approach to applying pressure on the trade negotiations puts excessive emphasis on merchandise trade when so much of the big money in U.S-China trade is no longer that.
We are still trying to work out who has got the best end of this export deal. Corinthians, a top professional football team in Brazil, has signed Chen Zhizhao from Nanchang Hengyuan on a two-year loan. Chen will be the first Chinese to play in the Brazilian league.
The diminutive 23 year old striker has sufficient talent to have spent the last six months in a development camp for promising Chinese players in Portugal, giving him a smattering of Portuguese that will be helpful at his new club. But Corinthians make no secret of the fact that Chen will be no more than a squad player. Their main reason for taking him on is to raise the club’s profile in China. Not that there is anything wrong in that. Professional football is a business and plenty of European teams have take on Asian players for just such marketing purposes, knowing that if they become first team regulars it will be a bonus.
The most successful examples of Chinese playing abroad are probably Li Tie and Sun Jihai in the English Premier League in the early 2000s. Manchester United signed Dong Fangzhuo from Dalian Shidein 2004, hoping to repeat in China the marketing success they have had in South Korea with Park Ji-sung, but Dong never made the grade as a player. That may be the challenge for Chen in Brazil, and limit Corinthians return on their investment.
Our man in the world of muddied oafs says the real prize for foreign clubs among China’s rising generation of players is Deng Zhuoxiang, a 22 year old midfielder who plays for Shandong Luneng but the transfer price being asked for him is intentionally prohibitive. Yet what China’s troubled domestic game really needs now, even as it brings in top foreign stars like France international striker Nicholas Anelka, is a homegrown player to star for a top club in a top foreign league, just as Yao Ming’s success in the NBA in the U.S. boosted basketball at home.
Our man in Davos sends word t0day of a CCTV debate on the global dimensions of China’s growth. Moderator Rui Chenggang likened China to a 16 year old Yao Ming, the basketball player, already 2 meters tall, but still lacking the muscle, skills and game experience that he would subsequently acquire and make him a basketball star.
It is an interesting metaphor by which to think of China which is now seen by the outside world, and particularly the U.S. and Europe, as a global power that China doesn’t yet see itself to be. It also helps explain the different expectations that the two sides have of what should be China’s appropriate global role and responsibilities.
Google has run a music search engine in China since last August. It is the only country where it has such a service (or at least for now). It does so in direct competition with Baidu, which has 60% of the search market in China and gets a substantial portion of its traffic from searches for MP3s.
Many of the MP3s Baidu links to are illegal, which is where Google sees its opportunity, in legal, higher quality downloads. Initially it had some 350,000 songs but now, Reuters reports, it has signed licensing deals with the four major Western record labels, EMI, Sony Music, Warner Music Group and Universal Music, that will expand the catalogue to 1.1 million songs. The labels will share ad revenue around the free downloads with Google and Top100.cn, a music website co-founded by basketball star Yao Ming.
Because of piracy, Western record labels have made as near to no money in China as makes no difference. Annual sales are a derisory $76 million, according to the International Federation of the Phonographic Industry, the industry’s trade organization. The Google deal is the first serious attempt to change that. “I can’t overestimate how important this is,” Lachie Rutherford, president of Warner Music Asia Pacific, tells Reuters. We’ll see.