This week’s covers | Edited August 12, 2023
Whe had two covers this week. One, linked to the latest investment restrictions in America, looks at how Joe Biden’s policy in China is going wrong. The other looks at how Saudi Arabia is investing in sports.
Mr. Biden’s new rules, announced on August 9, will police investment in China’s most sensitive technologies. This is the latest such curve with what used to be the world’s most important champion of open markets.
American officials want to protect national security, by limiting China’s access to cutting-edge technology that could bolster its military might, and to build alternative supply chains in areas where China maintains its grip. otherwise. They have promised to keep restrictions narrow. Our coverage in America and Asia argues that this approach does not work.
On the face of it, everything is going according to plan. In 2018 two-thirds of American imports from a group of “low-cost” Asian countries came from China; last year a little more than half did. Instead, America has turned to India, Mexico and Southeast Asia.
Investment flows are also changing. In 2016 Chinese companies invested $48bn in America; six years on, the figure had dropped to just $3.1bn. For the better part of two decades, China has claimed the lion’s share of new foreign investment projects in Asia. Last year it received less than India or Vietnam.
One interesting image of two shipping vessels – one representing China, the other America – showed that the real story is more complicated than that. Seen from one angle it looked like a strong victory for American policy, seen from another the winner is China. The design was clever, but we wondered if the cover was the best place to advertise that our subject is difficult to understand. Readers want us to make our arguments understandable, not to revel in their complexity.
One reason things are not as they seem is that countries that export to America are now more dependent on Chinese inputs than ever. China’s auto parts sales to Mexico have doubled over the past five years. Even in advanced manufacturing sectors, where America wants to move away from China, the countries that have made the deepest inroads into the American market are those that have the closest business ties to China.
An image of a pagoda-like stack of boxes said that when you unpack the trade statistics, you will find that China is still at the heart of the action. Sometimes that’s because inputs are sent to third countries, sometimes it’s because Chinese companies have set up factories there.
For many poorer countries, receiving Chinese investment and intermediate goods and exporting finished products to America are sources of jobs and prosperity. America’s reluctance to support new trade agreements is one reason why these countries sometimes see it as an unreliable partner. If asked to choose between China and America, they probably wouldn’t side with Uncle Sam.
We chose our cover because it overcomes the sense of danger. Without a clear sense of the benefits of taxes and their restrictions, de-risking threatens to make the world not safer, but more dangerous.
CEO: Joe Biden’s China strategy isn’t working
Finance & economics: How America is failing to break up with China
Our coverage in Europe looks at Saudi Arabia’s involvement in sport. Pumped up on petrodollars as they seek to reinvent themselves under Muhammad bin Salman (MBS), its 37-year-old de facto ruler, has spent $10bn on players, teams and leagues, spending on golf and football.
An image of a golfer driving a silver wedge showed that our first thoughts were about money. Even by past standards, the Saudi effort is massive. In football the kingdom is paying for some of the world’s top players, including Karim Benzema, to play in a revamped national league. He controls Newcastle United, an English club, and they can bid to host the World Cup in 2030. In golf, a tournament with a Saudi bank joins the PGA Tour, America’s men’s tour. The kingdom supports Formula 1, has contracts in wrestling and boxing and oversees winter sports and e-sports.
We had second thoughts about Saudi Arabia’s reputation. His shopping spree has angered fans, activists and Western politicians, who believe that the kingdom’s washing of sports is a violation of human rights – which gives a – into the murder of Jamal Khashoggi, journalist. They complain about the destruction of the sport’s sacred trophies.
So we created an image of a Saudi prince sweeping something under the rug. It’s fun – except that a broom is the last thing you’d expect from the country’s royal family.
An image of a football in clothes gut (a traditional head covering commonly worn in Saudi Arabia) evokes mixed feelings. Although some appreciated its directness and simplicity, others thought it poked fun at Arab culture. One of us went so far as to say that we could be seen as an argument for kicking the Saudis.
Problem about a gut it would have been a distraction from forcing our cover. Although our editor admits that Western enemies like Russia are against sanctions that include sports, he argues that Saudi Arabia does not belong to that category. America and Europe will do $140bn of trade with it in 2022, including oil and weapons – and both are more strategically sensitive than sending.
The Saudi spree mirrors an increase in institutional capital flows into sports. As of early 2020 more than $100bn of private equity funding has been deployed, often with niche funds. Many of these new investors see digital disruption as an opportunity. Although fans often fear that change would destroy something they love, sport is not just a competition between players, but also for audiences – and competitive forms of entertainment are not ‘standing still. Additionally, disruption can lead to developments that bring in new followers.
That argument led us to a cover in which there was a silver drop of oil, throwing all kinds of sports from Formula 1 to tennis high in the air. We found this too scary, so we added a little more oil for the final version of the cover. It’s a dirty business, sport.
CEO: Saudi Arabia rushed to global sport
Summary: Saudi Arabia spends a fortune on sports
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