The NBA's surrender to China shows free trade threatens more than jobs

In U.S. politics, there's a growing awareness that the last few decades of unfettered free trade with China has been corrosive to American jobs. What's less appreciated is that it's arguably corrosive to America's democratic norms as well. This weekend, we got a reminder of that latter point — from basketball, of all things.

The dustup started on Friday, when Houston Rockets general manager Daryl Morey tweeted his support for Hong Kong protestors with an image that read, "Fight for Freedom. Stand with Hong Kong."

A former British protectorate, Hong Kong was handed back to China in 1997. But its legal system still bears the hallmarks of British democracy, with rights to protest and free speech — protections other Chinese citizens don't enjoy. Hong Kong's "one country, two systems" agreement commits China to respect those protections for at least the next 50 years. But China's attempt to impose a new extradition law set off waves of massive protests, complete with accusations of violent crackdowns by Chinese officers, as Hong Kong residents viewed the law as an effort to violate their democratic protections.

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For its part, the Chinese government has dismissed the protesters as violent mobs and an illegitimate separatist movement. Given the ideological hegemony enjoyed by China's communist government, lots of consumers and centers of business power in China agree with the government's position.

This is where free trade and American basketball re-enter the story. The National Basketball Association has worked for years to build a fan base in China, which is now hundreds of millions strong. In fact, the Los Angeles Lakers and the Brooklyn Nets were scheduled to play two exhibition games in China this week. Major Chinese companies are among NBA teams' sponsors, and the company Tencent owns the NBA's digital rights in the country. In short, China's domestic market is a source of enormous revenue for the league.

The backlash to Morey from all these entities was swift. Chinese sponsors announced they were scuttling their relationships with the Houston Rockets. Tencent said it would blacklist Morey and stop streaming Rockets games. The Chinese Basketball Association and even the Chinese consulate in Houston made their displeasure known.

In response, the NBA's surrender was equally swift. Mike Bass, an NBA spokesman, called Morey's comments "regrettable" — and in a Chinese-language release, he went so far as to say he was "extremely disappointed in [Morey's] inappropriate comment." Houston Rockets owner Tilman Fertitta tweeted that Morey "does NOT speak for the @HoustonRockets." In a convoluted and historically muddled Facebook post, Nets owner Joe Tsai accused Morey of failing to appreciate Chinese sensitivities about western colonialism. Morey himself deleted the original tweet and issued a mea culpa, and his employment status with the Rockets is now reportedly under debate.

It was, on the whole, a remarkable collective act of groveling.

In a rare show of bipartisan agreement, U.S. politicians on both sides of the aisle lambasted the NBA for its retreat from the controversy, and for throwing the Hong Kong protesters under the bus. But one must wonder how they expected the NBA to behave.

America is a capitalist economy, and NBA owners are running private, for-profit businesses. Standing up for democracy is nice when you can do it, but at the end of the day, the Rockets and the NBA will hardly be eager to offend multiple sponsors and business partners — who often live and die by the good graces of the Chinese state — not to mention millions of fans. Given that opening up trade and investment with China has also been a long-held bipartisan goal of U.S. politics, this sort of uncomfortable entanglement was inevitable.

The NBA is also a relatively mundane example of the problem. More disturbing is the fact that massive tech companies like Facebook and Google have worked for years to develop versions of their platforms that will accommodate the Chinese government's demands for censorship and information control. These efforts have riven the companies internally, and both appear to have abandoned their projects, at least for now. But the fact that two of the most powerful global tech behemoths American capitalism ever produced were falling over themselves to conform to the standards of Chinese autocracy is a window into the amoral decision-making that occurs when the drive to make a buck intersects with anti-democracy regimes abroad.

If they were to open business in China, the revenue and profit potential for Google and Facebook would be huge. Meanwhile, versions of their platforms that cooperated with censorship would be powerful tools in the Chinese state's arsenal. Indeed, contrary to 1990s romanticism that the internet would force China to liberalize, the communist government has instead used western-developed internet technologies to create what is arguably the most sophisticated surveillance panopticon on the planet.

Other examples of this dynamic include the way major Hollywood motion pictures are now edited and rejiggered to conform to the Chinese market and avoid offending the government. Countless other U.S. industries now can't get by without their supply chains in China, leaving them vulnerable to various degrees to the political, ideological and moral demands of the government. Nor is the problem strictly about China, or even strictly about trade.

Liberalized trade does not just mean the free flow of goods across borders, it means the free flow of financial capital as well. And financial capital buys lobbying firms, funds think tanks, and more. Throw in America's deregulation of its own campaign finance laws and the free-for-all that is lobbying and influence-peddling on Capitol Hill, and it's not just domestic concentrations of wealth that can buy influence — it's concentrations of wealth anywhere on the globe. From China to Saudi Arabia to Israel to the United Arab Emirates, autocratic regimes and human rights abusers use these channels to bend American policy to their preferences. As David Klion observed in a biting essay for Foreign Policy: "The United States is less a great power exerting its will and more an open-air market for global corruption, in which outside powers can purchase influence, shape political outcomes, and play factions against each other in the service of their own competing agendas."

The point here is not that China is simply evil, and that we need to remove ourselves from its polluting moral influence. The country is many things, some of them good. But it is also a one-party state with an abysmal approach to human rights, free speech, and internal dissent. And American devotion to neoliberal economics allows the Chinese government to pour money into championing its own interests and anti-Democratic ideology, and to push U.S. firms into toeing that same line lest they lose access to China's massive domestic market.

Thus, America needs to be smart, and careful, and realistic in how we engage with China. The "free trade" ideology that's dominated our approach to the country since the late 1990s is none of these things. It's naive and utopian, flattening a bunch of complex policy and strategic choices into a simplistic moral narrative, in which both countries' citizens benefit equally from free trade, and the liberalized exchange of goods and capital inevitably pushes China's politics to liberalize as well.

That strategy has not only failed on both counts; it's arguably delivering results that are close to the opposite.

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