A Sino-Scottish Football Proposal

Readers of this blog will know of my interests (and soft spot) for all things Scotland. I previously wrote a brief ten-point approach to revitalising Scottish Football.

In the time that has elapsed since that article was written, we’ve seen a robust approach to football development in China. Now, football has always been popular in China but the attempts towards establishing China as a footballing powerhouse have been sporadic at best. However when President Xi Jinping became the President of the People’s Republic of China, it all changed.

president-xiIt has to be noted that President Xi is a huge football fan and he has publicly outlined his vision for China to one day host the World Cup and to then win it! In 2015, a 50-point plan was announced by the Central Planning Committee (of the Chinese Communist Party) to overhaul Chinese football and it was overseen by President Xi.

This desire for China to be a football giant isn’t a new one. The other Chinese leader in the past who had huge dreams for Chinese football was Deng Xiaoping, the architect for China’s economic liberalisation but his priorities had to be primarily on economic and social development.

Chinese football fans are a hugely passionate lot – I recall watching the Singapore Armed Forces FC (SAFFC) playing the Chinese Army Ba Yi team in 1998 at the old Kallang Stadium in Singapore and it was sellout turnout that was half Singaporean and half Chinese (despite the fact it was held in Singapore!) and the passion and energy was fantastic.

In fact, when Stockport County (from the Second Division) did a tour in China, their matches were attended by over 20,000 fans per game (more than five times their home average home attendance!).

The Chinese Football Association Strategy

The Chinese Football Association have clearly spelt out their desire and strategy to be a ‘world football superpower by the middle of the century.’

In an effort to match the strategy, they have embarked on a five-pronged approach towards delivering their vision.

1. Grassroots training, academies’ development and training

The Chinese investment into building the game at grassroots level is absolutely staggering. According to a memo sent out by the Ministry of Education in China on July 2015, they have identified 4,755 schools as specialist footballing academies.

Last year, the world’s largest (and arguably the most expensive) football academy – the Evergrande Football School – opened in Guangzhou, a Southern Chinese province. The school built in 10 months cost over $185 million. The school also has partnered with Real Madrid to provide the trainers and coaches to help develop about 3,000 young Chinese footballers.

Other football clubs, including Manchester City, and ex-players such as Luis Figo and Michael Owen have also established their football academies across China.

The Chinese government have also expressed a clear commitment to include football as part of the overall school curriculum.

This is part of the overall goal to ensure over 50 million children and adults play football regularly by 2020 and to develop the critical mass of high-quality players required to develop a world-class team.

2. Providing Chinese players with international experience and exposure

There have not been as many high-profile Chinese players in European leagues. The two most recognisable players were Sun Jihai and Li Tie who played for Manchester City and Everton respectively. Unlike South Korean and Japanese superstars (such as Park Ji Sung for Manchester United, Hideotoshi Nakata, Shunsuke Nakamura for Celtic, et et), Chinese players have not been able to shine at the top European leagues.

There is now concerted effort to get Chinese players playing in the top European leagues to get the international exposure. There is a reasonable expectation that this will not only allow for top players to develop their craft further but also help China in their international competitions.

It is to be noted though that Chinese players turning out for British teams saw over 350 million Chinese viewers becoming more interested in British football!

3. Ownership and partnerships with globally-renowned football clubs

The top Chinese companies are now investing, partnering or buying outright top teams across Europe. From Atletico Madrid to Inter Milan to Wolverhampton Wanderers, we see Chinese ownership. Chinese consortiums are also partners in other clubs such as Manchester City. This is part of a wider effort not only to drive economic benefits that come from effective management of football teams but to also learn and adopt best club management practices. These best practices will ultimately support better footballing management and establishment of world-class processes and procedures required to develop a football network back in China.

4. Bringing world-class managers and trainers to China

The top teams in the Chinese leagues are now bringing in expert football managers and coaches with very impressive pedigrees. The likes of Luis Felipe Scolari, Sven-Goran Erikkson and Dan Petrescu have come to Chinese leagues and have helped raise the level of the game in China.

5. Signing high-quality talent and superstars from overseas to play in Chinese leagues 

In the recent year we’ve seen the financial muscle of Chinese football clubs (supported by the richest Chinese companies and their billionaire owners, including Jack Ma of Alibaba fame and Wang Jianlin, owner of Dalian Wanda and China’s richest man) outbid top European clubs for the services of world-class footballers. From Ramires (£23 million), to Alex Teixera, to Hulk (for £47 million), to Carlos Tevez (being paid an estimated £20m per annum), we’re seeing a very deliberate policy of bringing the best players to China in an effort to drive up the overall quality of Chinese players in the Chinese League through better exposure to top talent.

What all of the above demonstrates is a clear laser-like focus on the Chinese government ambitions of winning the World Cup in the coming decades. We see the ambition being matched with money, political support and commitment from across all sectors (education, business and policy) – and this is just the start. 

One Area For Further Development

There is, however, one area which is still missing. Chinese players need to be playing against quality opposition week-in, week-out. Whilst the youth and grassroots development is a step in the right direction, it is going to take a decade or more before there is a crop of players who will provide the quality opposition. Having a few superstar players (limited to three foreign players per team in any event) again is not enough. Similarly, having a couple of world-class coaches is not going to be enough.

The Chinese league needs to have complete teams with quality players who can provide the Chinese players with the type of competition and exposure that will allow them to make step changes in their development and progress.

This is where Scottish football comes in!

What Could This Mean For Scottish Football?

The Scottish FA have provided for development loans to help build the youth football framework across Scottish football clubs. The Scottish FA have also provided financial incentives to Scottish football team for performance-based outcomes which include number of under-21 players in the first team.

Alistair Gray, in a BBC interview, also highlighted the quality of youth players from Scotland and the need for the players to have more competitive game time to further develop their capabilities.

The Proposal

My proposal is that the Chinese Football Association allow for the Celtic U23 and Rangers U23 participate in the Chinese Super League and increase the size of the league from 16 to 18 teams.

What would this mean for Chinese football and the players in the league?

  • It means that you will have the top Chinese teams playing against the cream of the crop from Scottish Football , against young players who are technically very competent.
  • It will also allow for Chinese teams to get used to the pace of football Scottish teams can provide and help build the overall footballing game intelligence for Chinese league players.
  • This will allow for a much more holistic development of Chinese players and get them acclimatised to playing against different styles and against much higher overall quality players.
  • It could also lead to a more formal exchange programme between Chinese league players and Scottish football clubs and also promote greater youth development through these exchange programmes.

There are significant benefits for Scottish football as a result of this proposal:

  • It will mean the top youth players from Scotland will have the opportunity to play against an up-and-coming group of Chinese players and further hone their skills.
  • It will also create greater interest in Scottish football by Chinese fans and will spur a greater following. It will help expose Chinese football fans to the intrigues and entertainment of Scottish football. The history of Scottish football, its lore and fables – from the Lions of Lisbon, to the history of the Old Firm derbies,   Archie Gemmill’s wonder goal against the Dutch in the 1978 World Cup. This will allow for the Scottish Professional Football League to negotiate better rates for the TV deal in China in the future. Imagine a world with a billion more interested Scottish football fans!
  • An Old Firm derby in Shanghai – the opportunity to recreate one of the world’s most historic football rivalries, creating an interest in the history and ethos of both Celtic and Rangers for an entirely new audience remains a very tantalising prospect.
  • It also provides a fabulous opportunity for Scottish youth to experience a year out in China, learning more about the culture and experiencing life from a different lens and perspective. This can only further build the bridges between cultures.

Ultimately this initiative will lead to greater awareness and relationships between both China and Scotland. It also becomes a fantastic opportunity for Scotland to showcase her natural beauty, the culture and traditions of Scotland and help increase the overall tourism and investment by Chinese.

It will also help the Chinese sports authorities get one step closer to meeting the Chinese leadership’s ambitions of one day winning the World Cup. Now, that’s an offer that will be hard to refuse.

 

China / Japan? History repeating itself?

japanchina2

Too far fetched?

Let’s consider briefly the facts and also some important caveats.

Population demographics

The results of a census taken in 2015 has placed Japan’s population at just over 127 million – a decline of about 1 million in about 5 years. Japan’s birth rate has been long below the total fertility ratio of 2.1 (currently 1.4) and nearly a third of all Japanese citizens are now over 65. This is already a source of policy and economic challenges for Japan and one that is likely to keep growing.

China’s one-child policy starting in the 70s has had a major impact. Whilst the policy has now been relaxed, the population control genie, once out of the bottle can rarely be controlled. Changing economic trends, mindset shifts, and a movement towards an urban citizenry means less people are keen on having children. The United Nations estimates that that the number of Chinese over 65 will increase by 85% to 243 million in 2030 (from the current 131 million). The Chinese working population saw its biggest decline in 2015 – a fall by a record 4.87 million.

Both Japan and China have very restrictive and insular immigration policies which will only serve to further exacerbate the population and demographic challenges. These demographic issues will also impact economic growth and development as in time both economies will have inverted population pyramids, where one active working individual will be supporting two parents and four grandparents – and better medical facilities and healthcare will lead to a greater demand on the working population.

Perhaps the spur in investment in robotics will help alleviate these challenges?

Economic growth history

Japan’s economic growth started with the development of its manufacturing base following World War Two with support from the USA and other Allied nations. Japan’s growth was an average of 9% between 1955 and 1973 (when the first ‘oil shock’ impeded growth).

In the case of China, following a debilitating post-war economic situation and the challenges of the Cultural Revolution, the opening up and reformation of the economic system from 1978 was instrumental in China’s economic story. China’s growth has averaged between 7% and 10% since.

The main engine of growth both in the case of Japan and subsequently China was manufacturing. It will surprise users of top-notch Japanese products today to learn that from the 1950s to around the 80s, ‘Made in Japan’ meant low-quality and cheap and people preferred to use American or European produced goods. However, the Japanese investment into their manufacturing processes, research and development over time meant that they started developing high-value and high-quality goods and products. It’s a process that took decades and systemic investment into innovation.

In the case of China-made products, there are still some challenges around quality and value, but this is something that is being addressed as we now increasingly see greater investment into research and innovation.

Funding world’s developing needs

Japan became development donor from as early as the mid-50s and by the early 90s, Japan became one of the largest officual development assistance (ODA) providers in the world. Grants, aids and soft loans were provided through agencies such as the Japan International Cooperation Agency (JICA) to countries across Asia, Latin America and Africa.

Japan then became instrumental in the establishment of the Asian Development Bank (an institution for which it has maintained presidency since inception in the 60s).

This allowed Japan to project its soft-power and help foster policies favourable to Japan across recipient nations.

If we examine China’s development assistance, aid and grants – it has grown from less than US$1 billion in 2002 to over $25 billion in 2007 to currently over US$100 billion. Due to differences in the way ODAs are valued, it is possible that China’s current aid and grants may be undervalued.

China also was instrumental in the set-up of the Asian Infrastructure Investment Bank (AIIB) with an express aim of building infrastructure across Asia-Pacific. Whilst both ADB and AIIB officials have been at pains to stress that they do not see each other as competitors (indeed they have already co-financed a number of projects), a primary reason why the AIIB was set up so as to have greater autonomy by China and other partners in multilateral banking institutions.

Slowing growth and liquidity trap

In the late 80s, Japan was running a very large trade surplus and the stock market and property prices were booming (there were properties which were valued at US$1.5 million per square meter – or ten square feet in Ginza!) which collapsed in the 90s. There was an asset bubble across both the stock and property markets and when the bubbles burst, it led to the loss of trillions of dollars of value.

Deflation set in and whilst the Japanese government tried its best to promote spending (including setting interest rates at near zero levels), there was little effect. Growth has been anaemic and in 2009 the GDP fell by 5.2%.

Japan found itself stuck in a classic liquidity trap where where its monetary policy had little or no impact on economic output and production levels. This led to the ‘tragedy of Japan’s lost decades.’

Let us now consider China. Relatively easy loans made by banks? Check. Booming property prices? Check. Booming stock market? Check. Corrections across all three areas? Check.

China’s economy has been slowly significantly and it’s GDP growth rate has fallen to a level not seen since 1990. A report from the Wall Street Journal indicated that investors are hoarding cash rather than investing – a classic sign of a liquidity trap. The stock market debacle in Shanghai in 2015/2016 has also dampened investor enthusiasm.

The Chinese Communist Party Politburo has also cautioned against debt-fuelled growth and rising asset bubbles. There is also evidence to suggest that the stimulus packages initiated by the government are having little impact.

Some key differences.

Whilst there are some similarities, it is important to note a number of major differences and caveats before any quick conclusions are made. Firstly, China starts off with a much bigger population base and the reverberations from the impacts will take a much longer time before they are felt.

Secondly, China’s political system lends itself to a greater continuity in policies which may be effective in warding off economic downturns and avoid ‘lost decades’ the likes which Japan went through. Japan on the other hand went through nine prime ministers in the 11 years between 1989 and 2000 which hardly allows for lasting measures and policies.

In order to avoid the liquidity trap challenges, the Chinese government will need to focus on its war against graft and corruption and instil trust in the public institutions. Long-term and difficult policy decisions in the areas of state-owned enterprises reform need to be made in order to boost productivity. There needs to be continued efforts to keep narrowing the inequality gap and create greater employment opportunities which will in turn boost spending and help deter deflation.

The road ahead is a difficult one but there is no reason for history to repeat itself as long as the mistakes of the past are not repeated.

 

Muzzling a rockstar central banker – the Indian way

This article reflects only my own personal thoughts and do not reflect the official position of any other organisation. Responsibility for the information and views expressed this article lies entirely with me. 

The news of the resignation of India’s central banker Raghuram Rajan has unsettled Indian investors, and rightfully so.

Rajan was one of India’s best central bankers and was a cornerstone in driving the Indian economy over the last three years.

Here is a man who in 2005 at a conference in Jackson Hole made some prescient statements about how financial developments have made the world a riskier place and called out the systemic risks posed by banks to the global economy. (His speech can be found here: https://www.imf.org/external/np/speeches/2005/082705.htm). He was derided as a luddite who was misguided. However, the developments of the 2008 financial crisis proved him right and a number of his proposed safeguards have since been implemented.

Some may question why the current Indian administration has removed a man who is widely recognised as an architect of India’s growth story.

It goes back to 2014, when Rajan questioned Modi’s “Make in India” campaign and cautioned against “against picking a particular sector such as manufacturing for encouragement, simply because it has worked well for China. India is different, and developing at a different time, and we should be agnostic about what will work.”

Last year, Rajan also questioned the rising of sectarian tensions and intolerance propagated by factions associated with the currently ruling government.  In a speech to the Indian Institute of Technology last October, Rajan lambasted the rising intolerance and stated: “India has always protected debate and the right to have different views. Excessive political correctness stifles progress as much as excessive license and disrespect.”

This is consistent with the pattern of behaviour displayed by the current Indian administration .

What have Modi and his administration achieved in the last two years:

 

So what does this administration do in response? Remove one man who can help make a difference and help improve matters.

Another great article here: By getting Raghuram Rajan out, Modi may have won, but India has lost

I am genuinely concerned at the state of affairs in India and despite the sometimes effective PR campaign Modi’s government may run, the cracks are beginning to show.

India’s always been a home to alternative thoughts, ideas, ideologies, religions, faiths, beliefs, ethnicities and ways of life. We have been a beacon of hope and democracy for all and it is very sad to see the very edifices of inclusivity and secularism crumbling.