A rap on the knuckles, but no burst bubble as Chinese football clubs are brought to heel
While unlikely to puncture their dreams, moves by the government to restrict spending on foreigners are still a warning best not ignored
Now that China’s football player transfer window is open again, hardly a day passes without a new rumour about an overseas player moving to the Chinese Super League emerging. Hot on the heels of Carlos Tevez and Axel Witsel, there seems to be an endless stream of other proposed big money moves.
As a counterpoint to these stories, there is an equally plentiful supply of newspaper, website and blog articles from cynics and naysayers who are at pains to point out that China’s player transfer bubble is going to burst. Part of the narrative associated with this view is that Chinese investors have more money than sense.
Into the space between the rumours and the reality has stepped the Chinese government. The General Administration of Sport of China recently stated on their website that it intends to restrict spending by football clubs, accusing them of ‘burning money and paying excessive wages to foreign players’.
This and other similar statements by some of China’s state institutions has led various foreign observers to gleefully exclaim that China’s football bubble has, indeed, now burst. However, this rather oversimplifies an issue that is in many ways characteristic of a myriad of more general issues currently facing China.
Perhaps the most significant of these is the problem of Chinese offshore investments and the associated external currency flows.
During 2016, it has been estimated that upwards of US$100 billion left China as their investors sought overseas opportunities. Often, these investments were made in order to mitigate risks associated with domestic investment in China.