While the world is watching Evergrande Group's crisis, it is football that underlines how the Chinese state functions

The world is watching the Chinese conglomerate Evergrande Group, once among one of the most powerful companies in the world and the second biggest in China after Alibaba (owned by Jack Ma). The same company, yes, is now reeling under potential defaults. It is holding an inglorious record of being the most indebted conglomerate in the world, with more than $300 billion in debts. The Chinese government, which is embarking on a major crackdown on major firms to ensure that they would get the lesson about financial regulation - which is recently being imposed by Beijing to control the money influx and borrowings - has suddenly changed the tune and throwing over $14 billion cash to save the company.

The current crisis of Evergrande is threatened to turn China into a major moment of another Lehman Brothers, the American company that crashed in 2008 and sparked a widespread economic crisis. The fear is real and Fitch to Moody had decreased the credit rating of the Chinese firm with the risk raised all-time high. It's not that the Chinese company truly trembled in the flood of debt, but the way how it handled the estate development and overconfident when joining in a lot of subjects without control, paved the crisis to accelerate.

One of the subjects Evergrande has involved is football (or for freedom-addicted, soccer).

For the President

Xi Jinping is the current President of China since 2012 and is poised to become the eternal President of China since Mao Zedong, after abolishing limit terms in 2017. Previously, the Presidents of China - all from the rank of the sole-ruling Communist Party - had five-year term only, underlined by Deng Xiaoping in 1978.

Xi Jinping is an ambitious person, who has installed the megaproject "One Belt, One Road" and expanding the military force of China, currently the largest in the world. He also assures China to become more aggressive on every front. And one of them is football, the most-loved sport in the world and also President Xi's favourite.

Xi Jinping playing football at Etihad Stadium in London, 2015.

Xi Jinping visited the home stadium of Manchester City, Etihad, in 2015, as part of China's wider strategy to boost influence. In there, he got photos with some of Man City's players at the time and dined there, too. Xi didn't hide his attitude: he loved football.

Fulfilling this ambition even further, Xi Jinping stressed three musts: must host, must qualify and must win the World Cup. This is followed by the expansion of the Chinese Super League, the country's first-full professional football league, established in 2004.

Indeed, one of the first participants in Xi Jinping's agenda is no other than the big Evergrande, founded by Xu Jiayin, also known as Hui Ka Yan in Cantonese. The company acquired Guangzhou F.C., a small team, in 2010, and Hui Ka Yan promised to pump more cash for the club. The result? With the influx of money from the company, Guangzhou F.C. emerged and succeeded in becoming the most formidable club in China, winning two Asian Champions League titles and finished fourth in the FIFA Club World Cup twice. For once, it was the most valuable club in China, still stays, and is also among one of the best football clubs from China.

Realising the benefits, the other conglomerates jumped into the giant lake, though some of them did it longer than Evergrande. Tianjin F.C. was acquired by the TEDA Holding Group (abbreviated from Tianjin Economic-Technological Development Area) in 1998; Sinobo Group took the fair share with the original CITIC Guoan Group since 2016 to have the ownership on Beijing F.C.; the Shanghai International Port Group (SIPG) took control of Shanghai Dongya and helped the team to achieve promotion to the Super League in 2012; and many more. Most notably, the recent champions of the 2020 season, Jiangsu Suning, was owned by Suning Group in 2015.

The arrival of Chinese conglomerates to big football clubs in the Super League came with no surprise: it was to dedicate their love for football as a gift for the President of China. So it became a fertile ground: the overpaying salaries from the Chinese owners exacerbated with the arrival of foreign superstars like Hulk, Lucas Barrios, Sejad Salihović, Marcelo Moreno Martins, Jang Hyun-soo, Tim Cahill, Morteza Pouraliganji, Burak Yılmaz, Graziano Pellè, Marouane Fellaini, Axel Witsel, Oscar, Gervinho, etc. Not just that, but also managers like Felix Magath, Sven-Goran Eriksson, Fabio Capello, Luiz Scolari, Manuel Pellegrini, etc, also got salaries only in imagination. Moreover, the financial muscles of these conglomerates also enabled them to build superior football academies at home. One of the world's largest football schools is built by Evergrande Group, in Guangzhou, as an example.

The financial balance of China was brought to its knees, but the Chinese government pretended not to hear it first, due to the dedication for Xi's football passion.

To plundering foreign clubs

Yet Chinese owners aren't really interested only in taking football at home, they also sought to claim football clubs abroad.

Chinese businessman Li Yonghong after claiming ownership over A.C. Milan, the most prestigious club in Italy, in 2016.

Perhaps the highest-profile Chinese owner must be Li Yonghong, who took over A.C. Milan in 2016. The red-black (Rossoneri) was fading at the time when he was assigned to take charge of the Italian giant, replacing Silvio Berlusconi. However, in just two years, he threw billions from his deposit with little success, as Milan's squad didn't improve so much. Then the charges of corruption and overpaying haunted the club, as the Chinese owner didn't seem to be prepared for such issues. In the end, by 2018, he had to sell his club to an American firm, leaving with emptiness and a club in total financial and identity crisis. A.C. Milan's return to the UEFA Champions League in 2021 was partly following the American firm's awareness of large sum spending to no avail of the former - hence the financial regulation was put in control.

The red-black wasn't the only. Its neighbour, Inter, is also owned by a Chinese, the young Steven Zhang. Though Inter is far from restoring its glorious past as well, its recovery has been faster than the Rossoneri, somewhat due to Steven Zhang's at least reluctant passion toward the club. Steven Zhang is also a minor holder of Suning Group that was also the stakeholder of the Jiangsu club. Still, despite having taken part in the UCL since 2018, Inter has been unable to move from the group stage, a sustaining pain in the heart of the club.

In England, Wolverhampton Wanderers fell to Fosun International of China in 2016. Gao Jisheng, a Chinese businessman followed suit, claimed 80% of Southampton in 2017. Wolverhampton enjoyed a degree of success, notably in the 2019-20 season when it reached the quarter-finals of the Europa League. Unfortunately, the club had seen its fall by the end of 2020 and struggling to recover its glory. Meanwhile, Southampton is in dismal shape despite the Chinese ownership in the majority.

In Spain, Espanyol and Atlético Madrid are the two most notorious clubs to be shaped by the Chinese as well, though the latter was more varied. Espanyol is the home of Chinese footballer Wu Lei, who became the first high-profile Chinese since Sun Jihai, to play abroad; but Espanyol has been relegated for one season. Meanwhile, Atleti's Chinese owner isn't the majority, as the chairman of the club is a native Spanish tycoon, Enrique Cardozo; and an Israeli affiliate. It was the Chinese ownership not-so-dominating that at least put Atleti into a highly competitive form, winning two Europa League and reaching the UCL Finals twice.

It seems like the Chinese tycoons going abroad also face a significant level of scrutiny and questions, though a few did survive. But the methods of working from Chinese owners are significantly influenced by the work of short-lived successes rather than critical long-term views. Chinese developers tend to squander money buying players not by how suited is he but by the values and market transfer. Hence, it became a waste, a Bartomeu-like action.

But the unscrupulous nature of Chinese investors didn't come without a flame: the Chinese regime itself. As an attempt to whitewash China's image and to win Xi Jinping's attention, claiming stakes in big clubs are needed. However, compared to their fellow authoritarian Russian friends, whose football-state interconnected business brought fruits and wealth, Chinese dealers will have a lot of things to learn.

Decoding a superpower

As for the result, the oversized Chinese properties went uncontrollable by the time the COVID-19 pandemic broke out. The state of bizarre of Chinese football with its fragile alliance with the government was further harmed by the state's crackdown. Thus China's growing economy in 2020 didn't come to bear similar results for other sectors. Evergrande Group, in particular, was among the chaos.

With the liabilities of Evergrande Group saw no sign of decreasing, it caused investors to begin pulling out of money they invested for the assets of Evergrande, which is, by far, like a massive spider web, overextended into many other subjects from outside estate development. Evergrande is involved in water minerals, football, electric vehicles, etc. Too many to handle at once.

Yet this is also what the Chinese regime long desired for, controlling everything. It is just it didn't want to show it. The way Chinese conglomerates work reflects much of Beijing's ambitious dream. It has already harassed, from senators, sportspeople, to even anime and manga, for control, to correct the line China designed for. The same attitude from the Chinese investors in the world's most loved sport, regardless of the frontiers they take.

Guangzhou F.C., formerly known as Guangzhou Evergrande, was for once China's most formidable and richest club.

It would be no surprise that Chinese owners in foreign football clubs have already been hated in a number of clubs. A.C. Milan's fans remembered well the miserable days under Li Yonghong. Southampton fans have questioned Chinese investors due to the club's constant state of living under the fear of relegation. Espanyol, on the other hand, has struggled to find back its days due to the difficulties under the current Chinese rule, with the team got relegated once. Not all of them is to blame, notably, Atlético Madrid, in which sharing model between Spanish-Chinese-Israeli investors led to the rise of the fortunes of the club. Still, with blatant exploitation for the greed and power, Chinese businesspeople turned their clubs owned by them into personal properties at the expense of fans, effectively alienated its own staff, who are very dedicated to their firms. Chinese businesspeople could have learnt from Leicester City's Thai family owner, how they overturned the club to become one of England's emerging forces and giving new life for many footballers, notably Jamie Vardy - who used to bake cakes and sold for few pounds to continue his football career. But they did not.

Simultaneously, the dedication for the Super League in China is also drawn with the line of people affiliated with different political cliques vying for Xi's hug. The Evergrande Group, in particular, is strongly allied to Xi's clan, hence its football team, Guangzhou Evergrande, has won the Asian Champions League and plenty of Super League's titles. Perhaps with Xi on the side, they thought it would be a big, big party. An endless one.

No longer having the ball on the feet

It was wrong.

When China suffered a shock 1-2 loss to Syria in the 2022 World Cup qualifiers, the Chinese government began to apply more and more albatross toward the federation to revise the format. It was found that the clubs had the most faults to blame: overpaying, oversizing without question and that the government tolerated it for too long to raise China's profile.

So by December 2020, the CFA, Chinese Football Association, began to introduce a new list of demands. Two of them are the salary rule and domestic player law. The salary rule required foreign player salaries capping at €3 million (US$3.63 million) and domestic players at 5 million yuan (US$765,000) per year before tax. Investment bubbles were believed to be the reason for the overpaying issues. It warned the football tycoons to "not test our determination". The other law, domestic player law, demands each clubs to field a young player under 20 into the field to improve the status of Chinese football, once among Asia's brightest prospect.

However, the method was taken too little, too late. Shortly after the new requirements, clubs across China went plundered into crisis. Jiangsu F.C., controlled by Suning Holdings Group, suffered financial rupture as the company's sale went down. To rescue itself, the company finally announced it would stop funding the club, ceased all operation - this came after they won the first CSL title in 2020, just three months ago. Finally, on 28 February 2021, the 63 years old club ended its existence in pain as players went to disbelief. Suning Group is also the same group that has the majority of shares over Inter Milan, and as mentioned, Suning is more successful with Inter than with its own team.

Jiangsu F.C. when it was active in 2020.

This was not an isolated case. Shandong Taishan almost went bankrupt but managed to survive with a bailout and restructure; the same with Tianjin Tiger, which also almost ended its existence but got the lifeline. Some even went gone forever long before Jiangsu F.C., such as Tianjin Tianhai, which was disbanded in May 2020 due to financial crisis, Liaoning F.C. which had to end its existence in the same month and year for wage arrears, or Yabian Funde, ceased in 2019. Yet all came in one similar method with Jiangsu F.C.: overextension.

One could blame for the coronavirus pandemic that led to Jiangsu's collapse, but the fact that some clubs fell out of the Chinese football map like Yanbian Funde served as a reminder about how China is building an economy that so shiny yet fragile since it was built without the basic foundation. Sixteen clubs alone have vanished from China's football map by 2020-21 season in all three levels (Super League, League One and League Two).

And with the CSL in anarchy, so is the AFC Champions League (ACL) and other AFC competitions.

China is the largest donor to the AFC, the money from China funding the AFC far exceeds the likes of the powerful oil-rich Gulf monarchies. In fact, the AFC even helped to lobby FIFA to recognise China as the home of ancient football, which was achieved. Nothing so surprising that the Chinese government sought to take advantage from the glorious past for its gain. It is already one of the largest, finest economic donors to all football activities, going as far as financing and building stadiums across Asia, Africa and even Central America.

Now, with giant conglomerates in despair, the quality of Chinese Super League decreased. The Super League teams during the 2021 ACL had to send its reserve teams instead, which greatly contributed to Guangzhou F.C. and Beijing Guoan getting eliminated from the group stage. The 2021 ACL season was also severely hurt by the decisions from Australian clubs to not taking part in due to the COVID-19 pandemic. With the loss of Chinese clubs' once muscular finance and the absence of Australian teams, the AFC has to turn to the Arab investors to build up the money, but the Arab Sheikhs also found it difficult to get the needs. To see the lack of diversifying financial sources, truly hampers the AFC.

And China's run to 2022 Qatar has also been facing critical moments. Despite openly declared that China must qualify, as envisioned from Xi's dream, the Chinese first two games were disastrous - totally soulless and completely isolated of ideas against Australia and Japan, losing 0-3 and 0-1 respectively. Some have blamed China's failures partly due to the government's restriction during the pandemic and refusal to apply bubble travel for the team to play at home, but even with these explanation could not dissuade criticism at home.

Chinese players thanking fans after the 3-1 win over Syria in the second round that enabled China into the Third/Final Round.

Of course, it is too much to blame the whole national team. It is rather, a poor setup from the beginning, took the most of China's football capabilities. The powerful bodies must be the ones to take the headline, as they prioritise passion of Xi Jinping by wasting money for foreign superstars to arrive to China at the expense of youngsters. The upcoming two games for China next month are expected to be highly tricky: Vietnam is statistically weaker than China, but it has demonstrated the determination by scoring against Saudi Arabia and better performed against Australia despite ending in defeats; while Saudi Arabia is an established powerhouse.

Will it change?

Of course yes. But how long remains to be witnessed.

Beijing has begun a systematic crackdown of massive conglomerates since 2019, going as far as underlining that the government will not go to help them. Still, the promise only comes to reality for smaller conglomerates. Evergrande Group, by contrast, is governed by Xu Jiayin, who has been renowned for being a close henchman of Xi Jinping. He had resigned as CEO in April 2021 after the mounting debts appeared to be going nowhere. Xi Jinping has been reluctant to save the company, despite Xu's support for his regime.

To avoid a complete catastrophe that would put a second "Lehman Brothers" moment, the Central Bank of the PRC had lent over $17 billion to property developers, though it was thought to be backed by the state to the cash-crunch Evergrande. This also happens with Guangzhou F.C., the most successful club in Chinese football. Xi Jinping is a fan of the club himself, and while he may seek to refurbish Chinese football image, the collapse of Guangzhou F.C. will be too disastrous.

Yet the Chinese government doesn't know how to handle the debt bomb it is standing. Adopting wait-and-see is the most likely choice. This put even its own stakes abroad in danger. Inter Milan, after winning the Scudetto in 2021, ending Juventus' reign for a decade, saw itself had to sell away Romelu Lukaku, Antonio Conte and Achraf Hakimi, triggered a widespread protest among Inter fans. It was a bit luckier than the former affiliated Suning ally Jiangsu, it was able to add into the team some names like Hakan Çalhanoğlu and Edin Džeko, yet one has not reached full potential and one is aging, sparking fear for Inter's future; furthermore, the losses of major sponsors are putting Inter in a forehead - either restructure or suffer the same fate like Jiangsu.

It impacted the whole Chinese football society. Truly, cash-strapped conglomerates found difficult to provide finance, this also crippled the national team of China. The soulless style of Li Tie's China came with a squad that was entirely weakened, devastated and poorly trained, despite the wealth and facilities. To make it worse, attempts to set up friendlies against the United Arab Emirates as a perpetration was harmed by the host (China will play Vietnam in the UAE for October fixture) demanding money to be paid at a price slammed by Beijing "unacceptable". Chinese state media retaliated by reminding the UAE that it was safe from the pandemic because of Chinese vaccines, the UAE is one of the biggest recipents of Sinopharm and Sinovac from China.

Now, the pandemic is revealing the ugly side of the Chinese government and its allies. It has resorted in bullying and harassing, while plundering others for personal assets. But when it becomes uncontrollable, it'll be greedy, to even as far as abandoning its own prides for self-preservation. China has claimed it fought and succeeded in handling the pandemic, but it refused to apply bubble travel in spite of self-claim of high rate of vaccination, forcing the national side to play in the Gulf, cutting its own home advantage. Now, with no organised league clubs stable enough, attempts to rebuild the national team is also hampered by Xi Jinping's paranoia.

The world is still going with its way, but China is getting away further and further. More likely, drifting away like a locomotive train without a brake. It is running too fast, but doesn't know how to stop. When it needs to stop, it is entirely crashed. The way China made football a monopoly business is enough: it has missed the deadline.

Will China ever learn that they can't control everything? By allowing its own conglomerates to behave like king, then trying to assert control over its rouge children, China has unveiled itself as a hostile force willing to decay everything, even when it is the most important part of a person's childhood. When knowing no control, China will fail, and will not see a chance to win it unless it began to behave normally and focus on what it should have achieved at the first place. Evergrande debt crisis and its octopus influence are reminders of this.