Has China’s football transfer market sprung back to life?

Beijing football club Guoan has just broken the world transfer record for an African player. Simon Chadwick takes a look at whether China has once again moved the goalposts when it comes to the big money of the world game.

For all the usual hype circulating around the opening of Europe’s football player transfer window at the start of January, there was something drably inevitable about it. Following Brazilian international Neymar’s soft-power induced move from Spain’s FC Barcelona to France’s Paris Saint Germain (PSG) for a world record fee last August, we already knew considerable liquidity had been injected into the market for football players.

It was therefore entirely predictable that Barcelona, with money burning a hole in its pocket, would make a move for a high-valued star to replace Neymar. This came in the form of his fellow Brazilian international Philippe Coutinho, who joined the club from English Premier League (EPL) side Liverpool for £142 million (second only to Neymar’s fee in the list of most valuable transfers in history).

In the space of six months, France, Spain and Qatar (which owns PSG) have somehow conspired to fundamentally change the nature and scale of player transfers, perhaps forever. Yet twelve months ago, who would have predicted this? After all, this time last year many observers were aghast once more at China’s continuing forays into the transfer market.

Twelve months earlier, at the start of 2016, the likes of Costa Rican Jackson Martinez and Brazilian Ramires had grabbed headlines across the world by signing for Chinese Super League (CSL) sides Guangzhou Evergrande and Jiangsu Suning respectively.

At the start of 2017, Brazilian Oscar’s switch to Shanghai SIPG (from the EPL’s Chelsea) and Argentinian Carlos Tevez’s arrival at local rivals Shanghai Shenhua prompted frenzied speculation about the rapid inflation of a Chinese transfer bubble, as well as the potential for its eventual explosion.

In the end, China’s state authorities set about deflating the bubble by initially introducing a player quota ruling. This tightened what had previously been known as the ‘4+1 Rule’ so that it became the ‘3+1 Rule’. Essentially, the ruling meant CSL clubs could only have four overseas players involved in a match at any one time: three on the field, and one on the substitute’s bench.

Mid-2017, China’s transfer regulations were further strengthened following the surprise imposition of a 100 per cent tax on overseas player transfers (for clubs in debt). This meant that a player who might otherwise have cost £50 million would cost the signing club in China £100 million.

Significantly, the Chinese authorities’ rationale for the tax was that it would be paid into a domestic football development fund. In combination with ongoing government threats to shame irrational (overseas) investors, the summer player transfer window in China was a dull affair, the procession of overseas talent into the CSL having seemingly been choked-off.

At least, this was the assumption. Indeed, as the world’s attention has switched back westwards to Qatar and the like, few seem to have paid attention to the comings and goings of players in the CSL. Hence, as Coutinho has continued to smile nicely for photos in Spain, over in Beijing the world transfer record for an African player has just been broken. Cedric Bakambu, a striker with Spain’s Villareal, signed for the CSL’s Beijing Guoan for £65 million, of which approximately £30 million is reportedly being paid in tax.

The move is significant for several reasons, not least because it indicates that what many thought was a dormant Chinese transfer market has now sprung to life.

Clearly, record-breaking transfer deals are still possible for Chinese clubs, resulting in speculation that more big deals could be on the way. Whether this is the case remains to be seen, although the Bakambu deal could suggest China’s state authorities are adopting a more restrained approach to their transfer market interventions.

An alternative interpretation is that football clubs may have accepted that their player purchases will incur the 100 per cent tax, and have therefore incorporated the additional cost into their acquisition strategies.

Until there are further signings comparable to that of Bakambu, it will be difficult to make a definitive judgement about this, especially as Beijing Guoan (the only CSL club in the capital city) has a somewhat ambiguous relationship with the state. Last year, the club was involved in a rather opaque change of ownership that resulted in it becoming, literally overnight, one of the world’s most valuable clubs.

On the same day Bakambu swapped Catalonia for the Workers’ Stadium, a football website carried a story with the headline ‘The $40 million heist – how Tevez took China for the most expensive ride in history’. The story refers to Argentinian player Carlos Tevez, who is now back on home soil after 12 months signed with Shanghai Shenhua.

The timing of this story was ironic. After all, it is arguable that the exorbitant price of the Tezez transfer was behind the subsequent draconian, knee-jerk regulatory reactions of Chinese authorities. Without the Argentinian’s reported financial avarice, Bakambu might now be just another modestly priced African star heading east.

In this respect, we can only speculate. However, the fact the tax exists indicates that China read the Tevez deal correctly. Here was a player with a long history of being involved in turbulent transfers, which have seen him start and finish at Boca Juniors via spells in England and Italy. No surprise, then, that he is back at Boca for a third spell following his departure from Shenhua.

The heist reference in the piece about Tevez not only shines a light on the player’s financial appetite, but also that of his representatives, suggesting an initial degree of gullibility on the part of some Chinese sports investors.

And this is exactly why Chinese authorities moved last year to stem external currency flows by intervening in player transfers. Not only were these interventions intended to address concerns about risk and robustness in the Chinese financial system – they were also a tacit acknowledgement of state sensitivities around dealing with potentially unscrupulous foreigners who might take advantage of the country’s growing wealth.

For a government intent on putting China first, stuffing bundles of cash into an Argentinian’s back pocket was never going to be an acceptable outcome for anyone, from President Xi downwards.

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