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The Washington Post ... Today's WorldView ... September 27th 2021
Players on Guangzhou Evergrande's soccer team celebrate winning the Asian Champions League title on Nov. 21, 2015. (Power Sport Images/Getty Images)
Burgess COMMENTARY
Peter Burgess
By Ishaan Tharoor with Sammy Westfall
Before China Evergrande neared collapse, its soccer team chased global glory
You probably have now heard of the debacle surrounding China Evergrande Group. The Chinese real estate conglomerate is more than $300 billion in debt — a figure equivalent to 2 percent of China’s gross domestic product — and missed a key interest payment to investors last week. Its travails have sent jitters through global markets, with analysts fearing a Chinese crash on the scale of what followed the implosion of U.S. firm Lehman Brothers in 2008.
For now, the company’s predicament remains chiefly a headache for policymakers in Beijing. “Evergrande’s model of rapid, debt-fueled expansion during the boom years of China’s urbanization made the group one of the country’s largest developers and briefly turned Xu Jiayin, its founder, into China’s wealthiest business person,” explained my colleague Christian Shepherd. “Chinese cities are dotted with Evergrande’s high-rise apartments, many of them snapped up as investments by newly minted members of the country’s burgeoning middle class in recent years.”
Evergrande’s boom, though, ultimately exposed the perils of China’s way of doing things — including an opaque financial system that allowed companies like Evergrande to engage in relentless borrowing and expansion, but also alleged corruption and heedless accumulation of debt.
Xu swanned around the world in private jets, attended conferences in Hermes belts and reportedly turned down a $100 million yacht for being too plain. But his and Evergrande’s bubble has appeared to burst amid a slowdown in property markets and a political course correction by President Xi Jinping’s government, which has started reining in lending to overleveraged developers like Xu. Now, Evergrande finds itself in the crosshairs of a wider push by Xi that has been described by some commentators as a “leftward” turn against the Gilded Age-energies that powered China’s growth in recent decades. Nationalistic commentators want to see Evergrande be allowed to fail and left a shattered, cautionary tale of the rapacious greed of a clutch of powerful elites in the country — now no longer in Beijing’s favor.
“The company’s crisis is testing the resolve of Chinese leaders’ efforts to reform as they chart a new course for the country’s economy,” noted the New York Times. “If they save Evergrande, they risk sending a message that some companies are still too big to fail. If they don’t, as many as 1.6 million home buyers waiting for unfinished apartments and hundreds of small businesses, creditors and banks may lose their money.”
But until these past few weeks, the story of Evergrande for many non-Chinese outsiders was not about the fortune and misfortune of a real estate empire — but of a soccer team. For the past decade, Guangzhou Evergrande has been arguably Asia’s most successful club, winning eight Chinese league titles and the Asian Champions League — the continent’s most prestigious competition — twice in 2013 and 2015. Based in the southern metropolis not far from the border with Hong Kong and bankrolled by Xu’s property empire, the club was the poster child for Chinese soccer and a testament to Beijing’s global ambition.
Xi came to power in 2013 and made no secret of his interest in boosting China’s fortunes as a soccer power after decades of suffering humiliating defeats to regional rivals Japan and South Korea. To curry favor, major business leaders like Xu, who had stakes in China’s soccer league, devoted vast amounts of money to make their teams more competitive on the international stage.
For a number of years, Guangzhou Evergrande and a handful of rival Chinese clubs also owned by major property developers spent larger money on players than far more famous soccer clubs in the West. A string of somewhat prominent stars, many from South America, forsook promising careers in Europe for riches promised in China. Guangzhou Evergrande was the most dramatic illustration of this moment — its 2015 victory in the Asian Champions League signaled a kind of apex — and at one point was valued at $1 billion.
But its success was not sustainable and Xi’s government, seeing how little the flood of richly paid foreigners was doing to enhance the strength of China’s own struggling national team, slowly started to shift course.
“The prevailing political winds could change at any time, draining financial and governmental support,” noted Foreign Policy in 2018. “And while the Olympics model of heavily directing individual talent into smaller events paid off, the world’s most popular sport is harder to dominate than target shooting and synchronized diving.”
An aerial photo taken Sept. 26, 2021, shows the construction site of the new Guangzhou Evergrande soccer stadium. An aerial photo taken Sept. 26, 2021, shows the construction site of the new Guangzhou Evergrande soccer stadium.
Now, the state of Evergrande’s soccer team provides a parable for its broader decline. Both Xu and Jack Ma, the founder of tech giant Alibaba, which bought 50 percent of the club in 2014, are now seemingly persona non grata in Xi’s China. The team itself has been renamed Guangzhou F.C. as part of a nationwide mandate by authorities to use “neutral names,” and distance Chinese soccer from the excesses and vanity of these tycoon owners. Unsurprisingly, the club’s competitiveness at the continental level has diminished.
The Chinese Super League’s “club expenditure is about ten times higher than South Korea’s K-League and three times higher than Japan’s J-league, but our national team is lagging far behind,” Chinese Football Association President Chen Xuyuan told state-run Xinhua News Agency in February. “The bubbles not only affect the present of Chinese football, but also hurts its future.”
On Tuesday, Guangzhou F.C. parted ways with its coach, Italian World Cup-winning former defender Fabio Cannavaro. There are suggestions that provincial authorities may step in to assume part ownership of the club. It also may be disbanded, according to Bloomberg News.
Curiously, construction on a major 100,000-seat capacity stadium for Guangzhou F.C. by the Evergrande Group is still continuing no matter the company’s dire financial straits. The project to build what may be the world’s largest purpose-built soccer stadium began in April 2020 and may cost up to $2 billion.
“The world’s eyes are on it,” the owner of a small store nearby the construction site told Reuters on Sunday. “How could the biggest soccer stadium in the world not be built? It won’t become a waste construction site. The government wouldn’t let this happen.”
Talking Points
- • An independent probe commissioned by the World Health Organization found evidence to support allegations of sexual abuse and exploitation carried out by WHO staff responding to an Ebola outbreak in the Democratic Republic of Congo, according to a report issued Tuesday. WHO Director General Tedros Adhanom Ghebreyesus called it “harrowing reading.”
- • You’ve heard of Harry and Meghan. Now meet Mako and Kei, who have Japan in a tizzy. In a country ruled by the world’s longest-running hereditary dynasty, the saga of Japanese princess Mako, and her fiance, has drawn vitriol. Mako is set to abdicate her title to marry a commoner. And, facing intense public scrutiny, she is poised to become the first person to forgo nearly $1.35 million in taxpayer money offered in return for giving up the title.
- • U.K. Prime Minister Boris Johnson put British army troops 'on standby' to work as truck drivers to haul fuel to gas stations where supplies have been emptied by panic buying and labor shortfalls — not to mention Brexit and the coronavirus pandemic.
- • North Korea fired a short-range missile eastward into the sea Tuesday, according to South Korean military officials, marking the fourth test by North Korea this month, even as leaders in Pyongyang showed signs that they may be willing to resume negotiations with Seoul.
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Viewpoints
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Why Mexico’s relationship with China is so complicated By Martha Bárcena Coqui | Americas Quarterly ● Read more »
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Evacuation testimony
Gen. Mark A. Milley at a Senate Armed Services Committee hearing on Sept. 28 in Washington. (Jabin Botsford/The Washington Post)
Speaking at a high-profile Senate hearing Tuesday, Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff; Gen. Kenneth F. McKenzie, commander of the U.S. Central Command; and Defense Secretary Lloyd Austin testified in public for five and a half hours before entering a closed-door session with Senate Armed Services committee members.
Milley and McKenzie acknowledged that they had previously advised Biden not to withdraw all American troops ahead of the late-August evacuation from Afghanistan, testifying that they had personally believed that the military should keep a contingent of at least 2,500 U.S. troops on the ground.
The “unanimous” recommendation that Biden claimed his generals gave him to withdraw from Afghanistan by the end of August came only Aug. 25, Milley told senators. That was 10 days after the fall of Kabul.
Milley noted that the unanimous advice the generals gave Biden on Aug. 25 was motivated by the conviction that “the risk to mission and the risk to force and most importantly, the risk to American citizens who are remaining, that was going to go up, now down, on the first of September.”
He later added: “On the first of September, we were going to go to war again with the Taliban. Of that, there was no doubt, and we were already … in conflict with ISIS,” he said.
Milley says the Taliban had 6,000 troops in Kabul and that the United States would have incurred “significant” casualties if it had extended its withdrawal deadline past Aug. 31.
“If we’d stayed another week or two or three, then it’s likely there would have been another attack that killed American service members. Is that what you’re saying?” Sen. Elizabeth Warren (D-Mass.) asked.
“I would say that that is a near certainty,” Milley replied.
Intelligence suggests the Taliban did not allow an Islamic State-linked militant to slip by airport security measures and detonate explosives in the Aug. 26 Islamic State-Khorasan suicide bombing attack that killed at least 170 Afghans and 13 U.S. troops in Kabul, McKenzie said, adding that Taliban cooperation aided the evacuation effort.
“I believe they actually prevented other attacks from occurring,” McKenzie said of the Taliban, noting his “disdain” for the militants who seized Afghanistan.
The U.S. military chiefs were divided over whether the Afghanistan evacuation and the attendant mistakes had damaged the credibility of the United States in the world.
'I think that our credibility with allies and partners around the world and with adversaries is being intensely reviewed by them,” said Milley. “And I think ‘damage’ is one word that could be used. Yes. Yes.'
Austin said “I think our credibility remains solid,” but conceded that “clearly … there will be people who question things going forward.” — John Wagner, Eugene Scott, Karoun Demirjian, Alex Horton and Felicia Sonmez
Read more: Military leaders wanted U.S. contingent force in Afghanistan; fall of Kabul led to full withdrawal
1,000 Words
After nearly two weeks, the eruptions on La Palma, one of Spain’s Canary Islands near Morocco, show no signs of stopping as lava and smoke spills out, destroying homes, infrastructure and livelihoods. Experts fear what could happen if the flaming rock makes it into the ocean, resulting in possible dangerous chemical reactions releasing acidic steam and gas, as well as tiny pieces of volcanic glass into the air. (Nacho Doce/Reuters)
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