Economics and finance, Trade and industry, Arts, culture & society | Asia, East Asia, The World

23 September 2018

The amount of money it’s costing Qatar and China to put on the World Cup and Winter Olympics might be eye-watering, but the expenditure serves national interests far beyond the field of play, Simon Chadwick writes.

For Asian sport, 2022 promises to be an epic year. Over in the west, Qatar will be hosting the FIFA World Cup – arguably global sport’s biggest mega-event. Meanwhile in the east, China is set to stage the Winter Olympic Games, which follows the summer version’s Beijing sojourn in 2008.

These events are a big deal for the respective countries, which is reflected in their spending upon them. The figures are eye-watering: Qatar’s government is thought to have committed more than $200 billion to stadium construction and other tournament-related works; while China is spending $40 billion which, although considerably less, nevertheless ranks as one of the most expensive ever Winter Olympics.

The scale of these mega-events has led some to label them as vanity projects, soft power strategies, or sport washing exercises. Whilst some, all, or none of this might be true, such assessments are the effects of, rather than the causes that led to, these countries spending so heavily on sport.

That then begs questions why Qatar and China are investing in sport, and whether there are similarities and differences between them. The economic profile of both countries over the last two decades has been notable – China has frequently recorded some of the highest rates of economic growth in the world, and Qatar has become the globe’s richest country on a per capita basis.

More on this: Gold and glory, or a costly legacy?

Set against this backdrop, the countries’ respective governments have made a strategic commitment to investing in sport: Qatar as part of its 2030 National Vision, and China as part of a central plan leading up to 2025.

At one level, investing in sport is intended to deliver strategic benefits, for example improvements in national wellbeing. At another level, sport is a means to drive economic and industrial development and, hence, is viewed as a source of competitive advantage.

However, more fundamentally, what characterises China’s and Qatar’s programs are resource issues.

Resources are typically thought of as land, labour, capital and entrepreneurship, although an alternative view is that they are any productive assets that a country possesses. This can include knowledge, brands, political influence, diplomatic leverage and so forth. Drawing from resource-based theories, it is the way in which countries utilise and configure these resources that becomes a source of strength and advantage.

Both Qatar and China face significant challenges from having an abundance of some resources while a shortage of others. Qatar has a plentiful supply of carbon fuel deposits, notably liquified natural gas (of which it plans to be the world’s biggest supplier by 2024). However, the country’s history, location, climate, and industrial development mean that it has had a narrowly focused economy, imperceptible global presence and limited strategic influence (regionally, internationally and globally).

In China’s case, the country has a plentiful supply of labour as a result of having the world’s largest population. A significant proportion of its labour force is well educated, and there is a growing acceptance of and development in entrepreneurial competence.

More on this: A crude awakening for China's energy security

The sheer size of the country means ample land is available, its use albeit sometimes restricted by natural features. However, it is in the area of natural resources where China is particularly challenged. The country not only faces a scarcity of domestic natural resources but also struggles to feed itself. This means the government in Beijing must secure supplies of oil, gas and food from overseas territories.

Furthermore, there are certain industries in which China lacks expertise, which means it often struggles to compete in certain spheres of economic activity.

This interplay of resource abundance and resource impoverishment has led Qatar and China to look to external relations to manage their respective positions. The development of a sports industry in each nation might seem to be unrelated to such matters. However, the intense sports focus in Qatar and China is, in fact, inextricably linked to the resource challenges they face.

Qatari state investments in sport have embraced everything from acquiring football clubs (such as France’s Paris Saint Germain – PSG) to the signing of multi-million dollar sports sponsorship deals (for example, between the state-owned Qatar Airways and FIFA).

These patterns of spending are consistent with those commonly associated with rentier states, of which Qatar is a good example (along with others such as Abu Dhabi – owners of Manchester City).

Rentier states rely upon the generation of external rents, which can be broadly defined as the surplus delivered from the engagement of an asset. Typically, rent is conceived of in economic terms although it also has, for example, political and social dimensions too.

For example, Qatar’s acquisition of PSG is not only intended to generate a financial return for the country but also to enhance its soft power influence. Brazilian international Neymar’s world-record breaking move to the club is an illustration of this power. This helps to not only diversify the revenue-generating capabilities of the country, but also to build overseas diplomatic and political influence.

More on this: China’s non-interference dilemma

China similarly functions as a rentier state in the way it seeks to balance resource abundance and impoverishment. This is evident in how sport is used both by state institutions and other entities related to the state.

For example, China routinely uses stadium diplomacy in Africa as a vehicle for accessing and securing natural resources. Early in 2019, the African Cup of Nations will take place in Cameroon, a country with large deposits of oil (which accounts for around 50 per cent of the country’s total exports). Almost inevitably, China has therefore helped fund the development of stadia ahead of the tournament.

By externally investing like this, China reconciles resource abundance and impoverishment, providing finance in return for secure supplies of oil.

Yet there are also political benefits, not least in terms of China continuing to maintain its supposedly non-interventionist support for African nations (and others elsewhere). There are numerous other examples too: Fosun’s acquisition of English football club Wolverhampton Wanderers, Wanda’s purchase of Infront Sports and Media, and so on – clear symbols of Chinese resource management.

All of which confirms a hypothesis that countries like Qatar and China utilise abundant resources to secure scarce resources – to facilitate security and to build competitive advantage. This is sport, but definitely not in the way that most of us know it.

This piece is published in partnership with the China Soccer Observatory at the University of Nottingham.

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