We had two covers this week. One, tied to America’s latest investment restrictions, looks at how Joe Biden’s China policy is going wrong. The other looks at Saudi Arabia’s splurge of investment in sports.
Mr Biden’s new rules, announced on August 9th, will police investment in the most sensitive technologies in China. It is the latest such curb by what used to be the world’s most important champion of open markets.
American officials want to protect national security, by limiting China’s access to cutting-edge technology that could enhance its military might, and to build alternative supply chains in areas where China maintains a vice-like grip. They have pledged to keep restrictions narrow. Our cover in America and Asia argues that this approach is not working.
On the face of it, everything is going according to plan. In 2018 two-thirds of American imports from a group of “low-cost” Asian countries came from China; last year just over half did. Instead, America has turned towards India, Mexico and South-East Asia.
Investment flows are adjusting, too. In 2016 Chinese firms invested $48bn in America; six years on, the figure had shrunk to a mere $3.1bn. For the best part of two decades, China claimed the lion’s share of new foreign-investment projects in Asia. Last year it received less than India or Vietnam.
One mind-bending image of two shipping containers—one symbolising China, the other America—showed that the real story is more complicated than that. Seen from one angle it looked like a solid win for American policy, seen from another the winner is China. The design was clever, but we wondered whether the cover was the best place to advertise that our theme is hard to grasp. Readers want us to make our arguments intelligible, not to revel in their complexity.
One reason things are not what they seem is that countries which export to America now rely more on Chinese inputs than ever. China’s sales of car parts to Mexico have doubled over the past five years. Even in advanced-manufacturing sectors, where America is keenest to shift away from China, the countries that have made the deepest inroads into the American market are those with the closest industrial links to China.
An image of a pagoda-like stack of boxes said that, when you unpack the trade statistics, you find that China is still at the heart of the operation. Sometimes that is because inputs are shipped to third countries, sometimes it is because Chinese companies have set up factories there.
For many poorer countries, receiving Chinese investment and intermediate goods and exporting finished products to America are sources of jobs and prosperity. America’s reluctance to support new trade agreements is one reason why these countries sometimes see it as an unreliable partner. If asked to choose between China and America, they might not side with Uncle Sam.
We chose our cover because it gets across a sense of peril. Without a clear sense of the trade-offs from their tariffs and restrictions, de-risking threatens to make the world not safer, but more dangerous.
Leader: Joe Biden’s China strategy is not working
Finance & economics: How America is failing to break up with China
Our cover in Europe looks at Saudi Arabia’s binge on sport. Pumped up on petrodollars and desperate to reinvent itself under Muhammad bin Salman (MBS), its 37-year-old de facto ruler, it has spent $10bn on players, teams and leagues, upending golf and football.
An image of a golfer driving a wodge of cash showed that our first thoughts were about the money. Even by past standards, the Saudi effort is big. In football the kingdom is paying for some of the world’s top players, including Karim Benzema, to play in a revamped domestic league. It controls Newcastle United, an English club, and may bid to host the World Cup in 2030. In golf a Saudi-bankrolled tournament is merging with the PGA Tour, America’s men’s circuit. The kingdom sponsors Formula 1, has deals in wrestling and boxing and is eyeing winter sports and e-sports.
Our second thought was about Saudi Arabia’s reputation. Its buying spree has upset Western fans, activists and politicians, who think the kingdom is sportswashing human-rights outrages—which include the murder of Jamal Khashoggi, a journalist. They complain about the desecration of sport’s hallowed trophies.
Hence we created an image of the Saudi prince sweeping something under the turf. It’s fun—except for the fact that the last thing you’d expect the country’s royals to handle is a broom.
An image of a football wearing a ghutra (a traditional head cover commonly worn in Saudi Arabia) provoked mixed feelings. Whereas some admired its directness and simplicity, others thought that it poked fun at Arab culture. One of us went so far as to suggest that we could be seen as arguing for giving the Saudis a kicking.
A fuss about a ghutra would have been a distraction from the thrust of our coverage. Although our editorial acknowledges that foes of the West like Russia face sanctions which include sport, it argues that Saudi Arabia does not belong to that category. America and Europe did $140bn of trade with it in 2022, including in oil and weapons—and both are more strategically sensitive than putting.
The Saudi spree mirrors a surge in institutional-capital flows into sport. Since early 2020 over $100bn of private-equity cash has been deployed, often by specialist funds. Many of these new investors see digital disruption as an opportunity. Although fans often fear change will ruin something that they love, sport is not just a competition between players, but also for an audience—and rival forms of entertainment do not stand still. Besides, disruption can lead to improvements that bring in new fans.
That argument took us to a cover featuring a gusher of oil money, throwing all manner of sports from Formula 1 to tennis high up into the air. We found this too ebullient, so we splattered some more oil for the final version of the cover. It’s a dirty business, sport.
Leader: Saudi Arabia’s rush into global sports
Briefing: Saudi Arabia is spending a fortune on sport
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