The NBA-China Disaster Is a Stress Test for Capitalism

The business of American business is business. Are we okay with that?

Basketball fans with Chinese flag
Aly Song / Reuters

On August 19, the definition of a company in America changed. The Business Roundtable, a U.S. lobbying group that represents nearly 200 companies, issued a statement proclaiming that the “purpose” of a business in 2019 was no longer to look out merely for shareholders. It was to protect the interests of all “stakeholders”—employees, partners, suppliers, communities, the environment, the very world itself. The group’s lofty statement seemed to reorient the role of a public company from the maximization of profit to the maximization of goodness.

’Twas a lovely sentiment. And it lasted about 50 days. This week, the news dunked all over the Business Roundtable’s new definition.

The story started, as things often do these days, with a deleted tweet. Daryl Morey, the general manager of the Houston Rockets basketball team, publicized on Twitter his support for Hong Kong protesters, who are demanding a variety of civil-liberty protections from mainland China and the Hong Kong police. The tweet disappeared almost immediately.

But the damage was done. Chinese companies, furious over public sympathy for Hong Kong, were swift in their vengeance. They suspended licensing agreements with the NBA. They blacklisted the Rockets, historically the most popular U.S. basketball team in China, by barring them from appearing on state TV. The partnership between the NBA and China, which is worth billions of dollars over the next decade, is now in jeopardy.

The NBA—so proudly progressive on a range of civil-rights issues in the U.S.—torched its reputation. The league moved swiftly to condemn Morey’s advocacy for democratic rights; the NBA discouraged players from commenting on Chinese policy; and pro–Hong Kong signs were confiscated at exhibition games in Washington, D.C. Chinese appeasement, you might say, superseded free expression in the nation’s capital.

“We feel greatly disappointed at [Morey’s] inappropriate speech, which is regrettable,” the NBA said in a statement on the Chinese site Weibo. “We take respecting Chinese history and culture as a serious matter.” The sentiment expressed therein is technically known as public relations and is commonly known as bullshit. The NBA’s respect for Chinese culture and American free speech extends an equal distance—the length of a licensing contract.

It turns out that the business of American business is business.

The NBA’s mess has sparked the rarest of modern phenomena: bipartisan agreement in the United States.

Republican Senator Ted Cruz condemned the league, as did his fellow Texan, former Democratic Representative Beto O’Rourke. Conservatives and liberals alike have broadly excoriated the NBA for the hypocrisy of encouraging athletes to speak out on minority rights at home while indulging a Chinese government that has put some 2 million of its Uyghur citizens in Xinjiang detention centers.

But the laser-hot focus on the NBA’s sins is too narrow. Shouldn’t our scorn also apply to ESPN, whose bosses initially told employees not to overtly criticize China while covering this story? Or to ESPN’s parent company, Disney, which ignores the mainland’s human-rights abuses on the way to collecting hundreds of millions of dollars a year from films and amusement parks, such as Shanghai Disney Resort? Or to the broader American film industry, which regularly deletes scenes that offend Chinese officials or includes new scenes and characters specifically to flatter the Chinese government?

This is bigger than buckets or blockbusters: It amounts to nothing less than a global corporate conspiracy of complicity. In 2018, Marriott published an online poll that listed Tibet as a separate country, rather than a part of China. Roy Jones, a 49-year-old making $14-an-hour running social-media accounts for Marriott, liked” a post by a Tibetan separatist group celebrating the online survey. Jones didn’t write the survey. He knew little about China’s relationship to Tibet. He was just doing his job, which was to cheer on Marriott fans on social media. But Chinese authorities were furious about the survey and the “like.” Marriott's website states, “Taking care of people and putting their wellbeing above all else is in our Company’s DNA.” Jones was fired within a week.

The same year, Mercedes-Benz apologized for an Instagram post that quoted the Dalai Lama: “Look at situations from all angles, and you will become more open.” The Chinese objected to this perfectly boring statement because the Dalai Lama supports greater autonomy for Tibet. Mercedes sells twice as many cars in China than in the U.S. or Germany, and analysts have concluded that “without the emergence of China, the German premium business model would be broken.” So Mercedes looked at the situation from all angles and then, it would seem, selected the angle of shareholder preservation. They deleted the post and apologized profusely.

The muzzling of free expression at the behest of China extends even into the academic world. Last year, The New Republic reported on “an epidemic of self-censorship at U.S. universities on the subject of China.” Many scholars reportedly feel that criticizing the country is too risky, because colleges accept so much money from Chinese institutions affiliated with Beijing.

China exercises a kind of veto power over the global marketplace of speech. Every piece of content that is critical of the government, or dubious of its claims about Tibet, or Taiwan, or Tiananmen Square, or Xinjiang, is subject to grave financial punishment. It amounts to a kind of “values tariff” on the companies and individuals with which China does business. That is, rather than [x] percent tax on imported goods in China, companies must compromise [x] percent of their values to do business in China. The focus might be on the NBA today. But each firm with business there is paying the values tariff.

Everybody is having it both ways.

The NBA wields social advocacy as a sword within the U.S. and surrenders its outspokenness at the border. Multinational companies ask their employees to “bring their full selves to work” and then fire those employees when their “full selves” offend Beijing bureaucrats living 10,000 miles away. Academic institutions say they cherish free thought while giving Beijing sway over their employees’ thinking.

But if the NBA is cowardly, and Marriott is shameful, and colleges are hypocrites, then what are we, the consumers, in this equation? China is the U.S.’s largest trading partner, from which we import hundreds of billions of dollars’ worth of computer parts, toys, furniture, shoes, and plastic.

The American consumer is prone to ethical spasms, if not to consistency. When Equinox members discovered that one of the gym’s investors was a Trump supporter, it caused a national scandal. Meanwhile, the most popular app in the world, TikTok, was built by the Beijing-based company ByteDance, which, like every Chinese tech company, works closely with the same Chinese Communist Party that tortures Muslims in Xinjiang. Does this mean that American teens are ethically required to delete the app until China shuts down its Xinjiang reeducation camps? Does it mean, by extension, that smartphone users should boycott the iPhone until Apple extricates its supply chain from China? Is there such a thing as ethical trade with China at all?

The point is not that these questions demand simple answers, but rather that they’re nearly impossible to resolve—at least without sacrificing painful sums of capital, moral and literal. The U.S. and China aren’t just the two biggest trading partners in the world. They are the two biggest trading partners in the history of the world. International trade has increased global GDP, lifted billions from poverty, and made just about everything you can see, touch, smell, and taste more efficient to produce and therefore easier to consume. To completely sever the U.S.-China alliance would likely cause economic devastation to millions of workers, not only in the U.S., and not only in China, but also, due to the interconnectedness of the global economy, across the planet.

There is no escaping the fact that the stitching of global markets has spun a quilt of moral complicity. You don’t have to tweet, or talk, or run a company to pay the Chinese values tariff. It’s the cost of doing business. It’s the cost of doing just about anything.