Sports metaphors abound as the National Basketball Association clashes with China. That will happen when Donald Trump’s latest game plan against the second-ranked economy amounts to taking its best players off the court.
Literally, as his White House does a full-court press on banning mainland companies with bewildering speed. The so-called entity list of foreign firms with which Americans can’t deal with now includes more than 100 Chinese firms. US President Trump is benching China’s top talents.
That process coincides with basketball’s top talent – LeBron James – helping to turn the US-China rivalry up to 11. That, at the same moment one of Trump’s most valuable players does with the same over Hong Kong. And as many of corporate America’s biggest names commit fouls left and right.
The special Chinese administration region is at center court of all these controversies.
The NBA angle began on October 4 with a tweet, since deleted, sent by Daryl Morey, general manager of the Houston Rockets. It expressed support for Hong Kong’s pro-democracy protesters. China wasn’t having it. Xi Jinping’s government essentially banned basketball from the world’s most populous nation.
The NBA’s response was wobbly, at best. At first it criticized Morey, who we now know Xi tried to have fired. That caused considerable blowback in the US, including from Trump, amid anger the sport was kowtowing to China. Trump’s secretary of state, Mike Pompeo, quipped that “the pages of George Orwell’s 1984 are coming to life there. I wish the NBA would acknowledge that.”
What’s happening in Hong Kong, meantime, is plenty Orwellian, too. And about to become even more surreal as the US Congress moves toward passing legislation supporting the protesters. Xi’s China vows strong measures of its own if Congress goes ahead with legislation everyone knows it will.
That move pours even more cold water on a real and substantive US-China trade deal. Trump’s efforts to claim the two biggest economies had a “phase one” deal fell apart when China denied it. The odds of his 18-month trade war ending seem to be dying along with hope that Xi might take a more nuanced approach toward Hong Kong.
That leaves multinational companies fearing a sort of one-two punch. The first blow is realizing that there won’t be a genuine deal that alters the broad trade mechanics between Washington and Beijing. Add to that the risk Trump might find new ways to hit China, be it new taxes or taking more of its corporate players off the court.
The second is the geopolitical minefield which companies must contend with as 2020 approaches. Here, the NBA’s balancing act is a particularly bad omen of things to come.
Trade deficits and intellectual-property rights are issues that lead many Americans to grab the remote control to watch some hoops. The NBA being pulled into the fray, though, shows how the trade war is devolving into rank pettiness.
Twitter, remember, is banned in China. The only way a nation of 1.4 billion could be outraged over a 280-word tweet from a guy in Texas is for Beijing to find it and publicize it. This manufactured outrage only serves Xi’s desire to find ways to retaliate. And then, like clockwork, superstars like Los Angeles Laker James commit their own fouls.
James outraged the Twittersphere by calling Morey “uneducated.” Though he tried to clean up his comment, the clear implication was that free speech takes a backseat to multi-millionaires like James making more millions in China. James walked right into the Xi-era trap awaiting multinationals, too.
The list of companies bowing deeply to China is growing along with Trump’s blacklist.
Air France, Audi, Calvin Klein, Christian Dior, Coach, Delta, the Gap, Marriott, Qantas, Swarovski, Tiffany, Versace and myriad others have all engaged in copious groveling to stay in Beijing’s good graces.
Trouble is, China’s blackmail economics knows no bounds. Xi’s government has a pattern. First, it has a hissy fit over some slight, real or imagined. Next, it threatens retaliation. Then, once the offending executives grovel sufficiently, Beijing demands even more, moving the goalposts again and again – and again.
This pattern will continue until CEOs find a way to push back. Google, remember, left China in 2010 and still makes gobs of money. Granted, shareholders probably wouldn’t stand for companies pivoting away from the biggest economy.
But it’s time to find a happy medium. Otherwise, 2020 will see a bull market in CEOs tripping over the Chinese market.