As NBA/China controversy subsides somewhat, the general tensions won't go away

The controversy over the tweet by the Houston Rockets' Daryl Morey, followed by an NBA apology and then a statement backing free speech, coupled with a withdrawal by Chinese broadcasters and sponsors and a disturbing history lecture by Brooklyn Nets' owner Joe Tsai, has subsided somewhat, but it won't go away, neither regarding sports nor general business issues.

N.B.A.-China Spat Shows Sports Isn’t (and Shouldn’t Be) Just About Games, the New York Times's John Branch summed up 10/11/19:

“The N.B.A. has always been a league that prides itself on its players and coaches being able to speak out openly about political and societal affairs,” the reporter said. “I just wonder if after the events of this week, and the fallout we’ve seen, whether you both would feel differently about speaking out in that way in the future?”
A team representative chimed in immediately, saying they were accepting “basketball questions only.”
Irony died on the spot. (The league later apologized.)

....The fragility of the N.B.A.’s courtship with China — like many fraught relationships, built on desire, mostly of money — has been exposed. Suddenly the N.B.A. has gone as tongue-tied as middle-schoolers at their first dance.

There's lots more about sports and politics, as Branch points out, including deeply problematic team names (say, Redskins), repressive regimes hosting big sports events, and, in the U.S. of course, the question of players (like the NFL star Colin Kaepernick) essentially banned for protesting police violence. Not to mention momentous history, like the 1968 Olympics' protest or Jackie Robinson's entrance into major league baseball.

It reminded me of the debate, as I wrote in 2010, between sports columnist Will Leitch, who embraces the distracting nature of sports, and The Nation's Dave Zirin, who did (and does) seen the endless intertwining of sports and politics, including dubious stadium deals. (Also see Pamela Grundy's tweet about teaching U.S. history through sports.)

"I know I am willfully putting on blinders," said Leitch, the guy who later described Bruce Ratner as "pleasant and affable."

Sticking to sports

Wrote Branch:

Beijing sent the N.B.A. into a corner to think about what it did. “We have decided not to hold media availability for our teams for the remainder of our trip in China,” the N.B.A. announced in a statement Friday. “They have been placed into a complicated and unprecedented situation while abroad and we believe it would be unfair to ask them to address these matters in real time.”
The result: No one is speaking meaningfully about the issue. Sticking to sports appears to be the best way to appease the Chinese.
That might be the most damning thing to say about keeping the conversation to sports: China is all for it. An editorial for the English-language South China Morning Post came with the headline, “Sport loses out when politics enters play.” The newspaper is owned by Alibaba Group, the Chinese e-commerce giant led by Joe Tsai, the billionaire owner of the Brooklyn Nets.

That, of course, is somewhat disingenuous, as Branch pointed out, though it's understandably easier for U.S. athletes and managers to have a considered, life-informed opinion about domestic issues. But the NBA's Enes Kanter, for example, speaks out about politics in Turkey, at some risk.

The business issue

In a 10/11/19 column China’s Political Correctness: One Country, No Arguments, the Times's Li Yuan suggested that there was "some truth" to Tsai's claim that "1.4 billion Chinese citizens stand united when it comes to the territorial integrity of China and the country’s sovereignty over her homeland."

Wrote Li:

Of course, it’s a vast country brimming with opinions. But the Communist Party has spent decades preparing the Chinese people for a moment like this. The stir over Hong Kong shows, in dramatic fashion, how successful it has been, and how the world could be shaped by it.

That has to do with China's education system, which selectively focus on and downplays historical moments in favor of its “national humiliation education" narrative

One Chinese interviewed, wrote Li, tries to go against the grain:

Over the years, he had tried to show people around him the videos of the Tiananmen Square crackdown and other events. His family told him that he should look at the brighter side of the history. The party has since provided education, jobs and pensions, they said.
“I feel as alone as an island,” he said. “I’m surrounded by very familiar strangers.”

The NBA was hardly first

Numerous other companies have bowed to Chinese pressure before the NBA did so, such as airlines redoing maps to say Taiwan is part of China (as the larger country insists) rather than is independent.

In the November 2015 issue of Harper's, Barry Lynn wrote The New China Syndrome, detailing this enormous pattern of influence.

Wrote Lynn:

As our biggest manufacturers and traders and investors succeed in China, they also come to depend on China for future profits — which brings them increasingly under the sway of a Chinese state that holds the power to cut those profits off. What if the master capitalists and corporate bosses who have so cowed us here at home are themselves being cowed in Beijing? What if the extreme economic interdependence between the United States and China is not actually carrying our values into a backward and benighted realm, but accomplishing precisely the opposite — granting the Chinese Politburo ever-increasing leverage over America’s economic and political life?

China, he noted, was not just exhibiting "growing bellicosity in Asia":

What we have largely missed, though, is the emergence of a similar bellicosity within China, directed not at other nations but at foreign corporations operating inside its borders. When American corporations succeed in China, the result is not a mutual sense of comfort and familiarity, such as Toyota now enjoys in the United States. Instead we see a tightening of control, and increasing efforts to bend these powerful commercial institutions to the will of the men who run the Chinese state.

It's not merely mercenary:

But the Chinese increasingly appear to aim at more direct forms of control over foreign companies. In China, there is no independent judiciary, no rule of law, no real property rights, and certainly no corporate “free speech” rights. Hence one way for Chinese functionaries to control a foreign enterprise is simply to habituate its executives to the lash of arbitrary power masquerading as law.

Lynn points out that the United States has, in its own way, controlled business through trade, tariff, and other industrial policy:

A handful of U.S. companies have avoided exposing themselves to Chinese control, sometimes at great cost.

Those include Google and the New York Times, which have suffered monetarily, while other companies make their compromises:

But absent any coherent and countervailing pressure from the U.S. government, most companies have continued with business as usual, no matter what Beijing demands. 

Lynn's conclusion:

Is there any hope of reversing this sorry trend? Of course — if we move immediately to put country above company, and to restore the systems of checks and balances we used for two centuries to distribute power safely at home and abroad. But to do so, we must first understand that Beijing, however terrifying, is not our immediate enemy. To regain our liberty, we must first target the oligarchs in our midst. In tearing down the fences to gain more absolute liberty for themselves, it was they who let in the wolf.

Breaking from China?

Times columnist Farhad Manjoo 10/9/19  wrote Dealing With China Isn’t Worth the Moral Cost, denonouncing "the largest, most powerful and arguably most brutal totalitarian state in the world," citing repression, cultural genocide, and "digital shackles."

And the mistaken notion that opening the Chinese market would lead to freedoms has instead backfired:

A darker truth is now dawning on the world: China’s economic miracle hasn’t just failed to liberate Chinese people. It is also now routinely corrupting the rest of us outside of China.

Manjoo noted that the NBA was hardly alone in "corporate capitulation," given the size of the Chinese market. To avoid the "ever-steeper capitulation that China requires of its partners" and the increasing effectiveness of repressive technology, he suggests, "we’ll need a smarter and more sustained effort from our leaders."

NBA valuations

Yahoo's Keith Smith reported 10/9/19 on the impact of lowered Chinese revenues from sponsorships and broadcasting:

At least five NBA teams are having their salary cap personnel plan for a scenario in which the cap for the 2020-21 season could drop between 10 and 15 percent due to the current situation between the NBA and China, league sources told Yahoo Sports.
This is part of the teams’ regular seasonal planning, but "it's like the cap spike, but opposite,” a league source told Yahoo Sports. “After all the money everyone spent last summer, this would have a major impact on all of us."

That, of course, would filter down to team valuations. Tsai's purchase of the Nets was premised on growing international fandom and sponsorships, especially in China.

And what about Greenland?

Brooklynites knowledgeable about Atlantic Yards/Pacific Park have to remember that the main developer is now Greenland USA, the U.S. arm of Shanghai-based Greenland Holdings Group (or Greenland Group), and owned significantly by the government of Shanghai.

Though publicly traded in China, it's far less transparent than predecessor Forest City Enterprises/Forest City Realty Trust, which at least had to file regular reports with the Securities and Exchange Commission and hold regular conference calls with (mostly friendly) investment analysts.

While Greenland has announced it's moving ahead with the platform for vertical development over the railyard, necessary to unlock the investment the company's made so far, its plans surely may be vulnerable to corporate and geopolitical decisions made far away, based on factors well beyond the changing business case for residential towers in Brooklyn. 

Though the NBA controversy has tamped down, for now, another geopolitical controversy could have ripples.