The NBA Is China’s Willing Tool

Last Friday, Daryl Morey, the general manager of the Houston Rockets basketball team, tweeted his way into a shitstorm—by supporting democracy. Morey’s now deleted image proclaiming “stand with Hong Kong” prompted a massive assault from Chinese state and social media—and a frantic rush by the NBA to disavow him. China is a $500 million market for the NBA, and it would do nothing to endanger that revenue. The Rockets’ management discussed firing him and forced its players to trot out lines about how much they loved China while the NBA issued an apology—couched in moderate terms in English and absolutely craven terms in Chinese. An American business, one that prides itself on supporting freedom of speech in America, became an arm of Chinese censorship.

The NBA isn’t just following Chinese law in China; it’s imposing the Chinese Communist Party’s rules internationally. Such submission goes far beyond the NBA itself. As it happens, last week’s episode of South Park launched a bitingly accurate attack on U.S. film giants like Disney that now make movies to meet the standards of Chinese censors. But myriad corporations have backed China’s attempts to censor and control beyond its borders, from hotel chains like Marriott firing staff who support Tibet to Western airlines adopting Chinese demands on Taiwan to Yahoo handing over the emails of dissidents. Groveling apologies to China have become the norm, even over the most inane misinterpretations.

Some of the Chinese anger is driven by genuine public feeling. But state media stirs much of the rage, and those who dissent from the nationalist line are silenced. Initial rounds of online frenzy are followed by cutting off market access, either through formal sanctions or unofficial slowdowns. When China wanted to threaten South Korea over its deployment of the THAAD missile defense system, the South Korean supermarket giant Lotte was put in the firing line.

This isn’t what was supposed to happen. In the version of China-U.S. relations prominently promoted by President Bill Clinton and his team in the 1990s, and picked up on by many advocates of economic engagement since, foreign business, and the choice that came with it, would liberalize China. Instead, the reverse has happened. China’s leverage in the United States has massively grown even as the country itself has slipped ever further into despotism.

China’s leverage in the United States has massively grown even as the country itself has slipped ever further into despotism.

China’s leverage in the United States has massively grown even as the country itself has slipped ever further into despotism.

The NBA backs its players speaking up about American police abuse—but goes into panic mode if its staff back protesting the Hong Kong police. It’s not alone. Contrast Apple’s behavior in the United States with its actions in China. In the United States, Apple has fought for privacy rights, even challenging the FBI itself. In China, it rolls over as soon as the state barks. In part, that’s because tackling state power is possible in the United States. Chinese firms must humiliate themselves before party power, from pledging eternal loyalty to President Xi Jinping to letting party cells into their management structure and writing self-criticism letters. Yet U.S. firms also have much more ability to push back against Chinese censorship—and the option not to be in China at all. Very few of them have ever done so.

Part of this is the persistent, if dying, notion that maximizing shareholder value is the single duty of a publicly traded company. Under this theory, corporations should do everything legally possible to increase profitability. If that means making money from the surveillance state in Xinjiang or sacking employees who side with Hong Kongers fighting for freedom, so be it—that’s just as acceptable as poisoning lakes or using sweatshop labor.

But that explanation doesn’t go far enough. The NBA is not publicly traded. Bloomberg has no shareholders, but it still backed down from reporting on the Chinese leadership’s stolen wealth. Bloomberg claimed it acted out of fears for the safety of its staff: Others pointed out the threat to the wider terminal business in China. Michael Bloomberg himself still spouts nonsense about Xi not being a dictator. Such men can’t shuck responsibility for their own greed.

Yet there’s also the pull of conventional wisdom. For many years, it was embarrassing to talk about human rights in China in business and trade circles.

For many years, it was embarrassing to talk about human rights in China in business and trade circles.

It was provocative, difficult—and, if the word can ever be used about such deeply nerdy topics, uncool. National security concerns were tossed out the window alongside moral worries. The advocates of engagement with China dominated the annual World Economic Forum in Davos, Switzerland, to the degree that state media ran fawning profiles of its founder. Risk management firms—often led by former U.S. officials—advised their clients to get as close to the Chinese Communist Party, or CCP, as possible. Take this recent slide from a presentation by Evan Medeiros, the former Asia director on President Barack Obama’s National Security Council, to the American Chamber of Commerce in China, which advises “[c]onnect with and support Xi’s top goals” and “double-down on ties with CCP institutions.”

For many years, it was embarrassing to talk about human rights in China in business and trade circles.

U.S. corporate visitors also saw a very narrow slice of China. Executive visitors spent their time in China in Shanghai’s corporate suites and five-star hotels, being wined and dined by Chinese officials with a long-honed playbook for gullible guests. The “I’ve just spent a week in China and it’s the future” genre became common enough to be sharply parodied.

All this fed the fear of losing out. The belief that China is the economic future goes back a long way; Americans have been dreaming about hundreds of millions of customers since the 19th century. But it’s become especially acute in the last 20 years, as the Chinese economy rises and Chinese consumers become a real force. Even the locking out of foreign firms for political or security reasons didn’t stop these dreams. Men used to having their money buy them access to power worldwide seem to take cracking Beijing as a personal challenge. Mark Zuckerberg went running in Beijing smog, praised Xi’s unreadable book, and even asked the Chinese president to name his child—a move so cringeworthy that even Xi snapped back at it. Facebook is still banned in China.

This isn’t new. U.S. corporations have always been perfectly happy to do business with authoritarian states, including the Soviet Union. Ardent capitalists often loved the idea of labor’s power crushed beneath the government’s heel, a task that communist countries always performed with relish. The idea that democracy and unregulated capitalism—reframed as economic freedom—went hand in hand was a historical illusion, one formed by the circumstances of the Cold War. But no power before has had the combination of size and insistence of the People’s Republic of China. Soviet hostility to private business proved much less effective than the Chinese realization that it could be co-opted.

But corporate leaders are also discovering that groveling might not even be enough. The frenzy of nationalist sentiment and political paranoia in China demands sacrifices—even if it would be in the country’s best interests to back off after winning an apology. Despite the NBA’s actions, CCTV, the main Chinese state broadcaster, is still pulling Rockets games, and Chinese celebrities are falling over themselves to dissociate from the team. If you’re going to take the hit anyway, why not do the right thing?

At the same time, incidents that might once have gone unremarked by Americans are now drawing public attention. Partially that’s due to the nature of the NBA itself; Americans care a lot more about basketball than they do about airline bookings—and perhaps a lot more about freedom of speech in the United States than about Hong Kong itself. But China’s power is also becoming both increasingly obvious and increasingly nasty. It was possible to argue that the China of Hu Jintao’s era was an authoritarian power blundering its way toward a better future; today, with a million-plus Uighurs and other Turkic minorities in detention camps, a once thriving internet crushed, censorship increasing weekly, and Hong Kong in flames, that view is a lot less sustainable. The U.S. government, too, appears more willing to challenge Chinese power than ever, albeit under a deeply compromised and flailing president whose sporadic concerns about Beijing appear more rooted in racism than morality.

It will take political power in the United States to counter political power wielded by China. For U.S. companies to stop appeasing Chinese censorship, corporate decision-makers are going to have to believe that the reputational and political costs of doing so outweigh the damage done to their interests in China. That’s going to take concerted action from members of the public elsewhere in the world—boycotts, protests, public anger—and a shift in mood that makes giving in to China seem shameful or weak for CEOs among their corporate peers instead of forward-looking and pragmatic. The Communist Party’s political power can be checked, in part, by open democratic discussion of the power of Chinese money.

But it will also need targeted effort from politicians who say they care. That may mean dragging executives to testify about their decision, forcing more public embarrassment. It may mean threatening the government contracts and cozy tax breaks that firms often rely on. And ultimately, it may mean forcing tough decisions on firms about whether they can be in China at all.