Boycott calls on the rise, but China faces retaliation

Countries and businesses outside of China face increasing pressure to boycott the Beijing Winter Olympics next year, but China will not stand idly by in response, says risk consultancy Eurasia Group policies.

“Western governments and businesses face increasing pressure from human rights defenders and political critics in China to boycott the Beijing 2022 Winter Olympics,” Eurasia analysts say Group.

The Games are scheduled to take place February 4-20.

“China will punish countries that boycott the Games with political sanctions and trade retaliation, but with much greater severity in the sports boycott scenario,” they said in a report released Thursday.

“The activists focused on Beijing’s targeted crackdown on Uyghurs in Xinjiang, which some Western governments have called ‘genocide’,” the report said. “Calls to avoid what activists call the ‘Genocide Games’ will increase as the opening ceremony approaches, increasing the risks for governments, businesses and investors – whether they decide to boycott or not . “

Last month, the governments of Canada, the United Kingdom and the United States issued a joint statement accusing the Chinese government of inflicting a “broad program of repression” on the Uyghur people, including detention camps, labor forced and forced sterilizations.

China has repeatedly denied allegations of forced labor and other abuses in Xinjiang. Last month, the Foreign Ministry called the claims “malicious lies” intended to “smear China” and “thwart China’s development.”

Businesses have also been caught in the crossfire.

At the end of March, H&M faced backlash in China following a statement – apparently from last year – in which the Swedish retailer said it was “deeply concerned” by reports of forced labor in China. Xinjiang.

Supporters of the Olympic boycott argue that it is “necessary to punish China for its systemic discrimination against ethnic minorities in Tibet and Xinjiang, the crackdown on political freedoms in Hong Kong and hostility to autonomy in Taiwan”, said the Eurasia report.

Eurasia has described three possible scenarios: a diplomatic boycott, a sports boycott, or a so-called “outlier scenario”.

1. Diplomatic boycott

The most likely scenario – with a 60% probability – is that the United States joins at least one other major Western country in a so-called diplomatic boycott of the Games.

“A diplomatic boycott is defined here as downgrading or not sending government officials to the Olympics and taking other high-profile action to deprive Beijing of the limelight as host,” analysts said. .

Eurasia said the likely participants in a diplomatic boycott would be the United States, Canada, the United Kingdom and Australia, with the possibility of some European countries joining them.

In Asia, however, American partners such as Japan, India and South Korea – who have “more complex political dynamics” or deeper economic ties with China – should not join in such a boycott. .

The diplomatic approach is the least drastic scenario, according to Eurasia.

2. Sports boycott

In this scenario, which has a probability of 30%, one or more Western countries could prevent their athletes from participating in the Games, perhaps by exerting domestic political pressure. An economic boycott is defined as the ban on American viewers, broadcasters and sponsors.

“Sports and economic boycotts, which are harder for the public to ignore, would force even more severe retaliation from Beijing, possibly involving a diplomatic freeze and more widespread consumer boycotts against Western brands,” analysts said. Eurasia.

3. “Boycott lite”

It is an aberrant scenario where tensions between the West and China ease, and there will be “moderate political statements on the Games” but no formal boycott, analysts said, calling it a “boycott lite. “.

This is the least likely scenario and has only a 10% chance of happening, they said, adding: “There is currently not much reason to be optimistic about the trajectory of Sino relations. -western. “

Here, heads of state can refuse to attend the Games and invoke scheduling conflicts or other non-political excuses. “The rhetoric would be a long way from enthusiastic endorsement by Beijing as host, but there would be no boycott declaration or presentation of a united Western position,” the report said.

A boycott of the Olympics “would diminish any soft power dividend” that Chinese President Xi Jinping had hoped to gain from the event, which gives Beijing “a platform to promote its world status to the national public and project a positive image. to billions of foreign viewers. around the world, ”Eurasian analysts said.

“Beijing will almost certainly retaliate against countries implicated in the boycotts,” analysts said. “Beijing’s direct response to a diplomatic boycott would likely be a reciprocal boycott of Western events and sanctions against prominent supporters of the boycott.”

Increasingly, consumer companies based outside of China are trying to strike a balance – projecting an image of human rights concern to consumers outside of China on the one hand, while trying to avoid d to be excluded from the massive market in China on the other hand.

“If a company does not boycott the Games, it risks damaging its reputation with Western consumers. But if it does, it risks being shut out of the Chinese market,” analysts said.

Due to the high international profile of the Games, the retaliation in China could be “even worse” than the current removal of H & M’s commercial presence from the Chinese Internet, they said.

Still, analysts say most companies are likely to choose to compete in the Olympics because “the potential cost of losing access to the Chinese market will likely outweigh concerns over a backlash from Western consumers,” which, according to Eurasia, will probably be brief.

– CNBC’s Arjun Kharpal contributed to this report.