China View: Beijing’s Booming Sports Sector Fraught With Deep Dilemmas
AFP
Developing the sports industry has been an integral part of the government’s policy agenda since the People’s Republic of China (PRC) was founded in 1949. Sports development has been further elevated in the last two to three decades, exemplified by the growing popularity of domestic sports leagues, the hosting of sports events such as the Olympic Games, as well as the rapid construction of sports stadiums and facilities. The industry has become one of China's most dynamic sectors and has experienced significant growth in recent years and includes sports teams and organizations, equipment manufacturing, and facility construction.
Historically, the Chinese government has utilized investments in sports to promote economic growth. In rural areas in particular, the government has been investing in sport activities to address social and economic disparities between rural and urban areas. That being said, the industry is plagued by systemic problems that continue to inhibit development.
In 1949, China initially adopted the Soviet sports model in which sports development was directly controlled by the government through a top-down administrative system. In 1952, the first sports administration organization, the State Physical Culture and Sport Commission, was founded. In addition, youth sports programs were established, and the government began the construction of sports stadiums. In 1992, the government decided to officially adopt a market economy during the 14th National Communist Party Congress, which had a dramatic effect on major organized sports such as football (soccer), basketball, and table tennis. This policy paved the way in establishing professional sports leagues in the country. The government also began promoting sports in rural areas and drafted guidelines for sports development that aimed to improve fitness, education, and moral well-being.
"When sports events entered the countryside and business communities in cities, they 'set the stage' for cultural and tourist events to 'perform' on,"
- Gao Zhidan, Director of China's General Administration of Sport
During the early stages of sports development, a majority of funds came directly from the government budget. During the period between 1976 and 1988, elite sports such as football, basketball, and volleyball relied heavily on central and local government sports budgets. The source of financial support for sports in China has become more diverse in recent decades. Rather than relying solely on government funds, this shift towards privatization and commercialization allowed sports leagues to receive money from commercial investors and non-profit organizations. The opening up of the sports clubs to investors led to sharp increases in funds, which sparked a rapid rise in player and trainer salaries. Can this new market-based sports system coexist alongside the government-controlled sports system?
In order to promote rural sports development, the government implemented a policy to establish the New Rural Areas in 2006. This led to an increase in government investment and the construction of new sports venues and facilities. In 2014, the Several Opinions of the State Council on Accelerating the Development of the Sports Industry and Promoting Sports Consumption was also implemented. This policy promoted the development of the sports industry by addressing some of the institutional challenges that hinder the growth of the sector. This included increasing domestic demand for sports and promoting the integration of industry into the national economy.
President Xi Jinping has been a strong advocate of domestic sports development through policies such as the Outline for Building a Leading Sports Nation, which aims to make China a major sports country by promoting national fitness, athletics, sports industry, and sports culture. Xi Jinping has also pushed to enhance the Law on Physical Culture and Sports by creating “a development plan for the sports industry, expanding its scale and enhancing its vitality to meet the diverse sports needs of the people”. The government is implementing a wide range of reforms to support the industry which has helped it grow. As a result, China has become a hub for large-scale sporting events, which has had a large economic impact through sponsors, ticketing, and tourism.
The government has also recently announced plans to grow the country's ice and snow economy to 1.5 trillion yuan ($208 billion) by 2030, which focuses on promoting winter sports, tourism, and equipment manufacturing. A set of financial incentives were announced to support the industry including “improving access to credit for companies operating in the winter sports sector and encouraging qualified companies to pursue initial public offerings”.
Sports development has come a long way in China as the government has continued to invest. This sustained effort has helped increase employment opportunities and has boosted the construction of facilities and parks. However, the sports sector is experiencing several crippling challenges that are hindering the growth and development of the industry. The industry continues to be dominated by sporting goods manufacturing and sales of sporting goods, which accounted for 75% of the total sport economy in 2014. Another problem is the monopoly that CCTV, the national television company, has on sports broadcasting. While TV rights are one of the main sources of income for sports industries in other countries, “their contribution remains negligible” in China’s sports sector.
There are also issues between the centralized sports administration system and the market-based professional sports system. “It is widely considered that this centralized governing system itself has become one of the major obstacles that should be deregulated and reformed to materialize the huge market potential of the sport industry in China”. Corruption is also a major issue in Chinese sports. There is a significant amount of match fixing, illegal betting, and bribing. The pervasiveness of corruption has also negatively impacted viewership and investment in domestic sports leagues.
Despite these problems, China's sports industry has developed rapidly in recent years reaching 2.7 trillion yuan ($408 billion) in 2020 and is projected to reach 5 trillion yuan ($750 billion) in 2025. Although the sport economy in China is still dominated by sporting goods manufacturing, the structure is improving within the sports service sector, which accounted for approximately 23% of the total sport economy in 2017, up from 17% in 2006. The government has also implemented massive crackdowns to address corruption in sports. In September of 2024, 38 soccer players and five club officials were banned from the Chinese Football Association for match-fixing and gambling. The former president of the Chinese Football Association Chen Xuyuan has also been sentenced to life in prison for fixing matches and committing other financial crimes.
