Calls for boycotts are increasing, but China saw retaliatory measures

Countries and companies outside of China are under increasing pressure to boycott the Winter Olympics in Beijing next year, but China will not sit back idly, says political risk consultancy Eurasia Group.

“Western governments and companies are under increasing pressure from human rights activists and political critics of China to boycott the 2022 Winter Olympics in Beijing,” said Eurasia Group analysts.

The Games will take place between February 4th and 20th.

“China will punish countries boycotting the Games with political sanctions and commercial retaliation, but with much greater seriousness in the athletic boycott scenario,” they said in a report published Thursday.

Campaigners have focused on Beijing’s targeted repression of Uyghurs in Xinjiang, which some Western governments have called ‘genocide’, the report said. “Calls to shun what activists are calling the ‘Genocide Games’ will intensify as the opening ceremony approaches, increasing risks to governments, companies 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 imposing a “comprehensive program of repression” on the Uyghur people, including detention camps, forced labor and forced sterilizations.

China has repeatedly denied allegations of forced labor and other abuse in Xinjiang. The State Department last month called such claims “malicious lies” designed to “smear China” and “frustrate China’s development.”

Companies have also been caught in the crossfire.

In late March, H&M faced backlash in China after a statement – reportedly released last year – in which the Swedish retailer said it was “deeply concerned” about reports of forced labor in Xinjiang.

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

Eurasia outlined three possible scenarios: a diplomatic boycott, an athletic boycott or a so-called “outlier scenario”.

1. Diplomatic Boycott

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

“A diplomatic boycott is defined here as lowering or not sending government representatives to the Olympics and taking other high-profile steps to deny Beijing the spotlight as a host,” the analysts explained.

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

In Asia, however, US partners such as Japan, India and South Korea, which have “more complex political dynamics” or deeper economic relations with China, are not expected to join such a boycott.

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

2. Athletic boycott

In this scenario, with 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 banning American spectators, broadcasters and sponsors.

Athletic and economic boycotts, which are more difficult for the public to ignore, would enforce even tougher retaliation from Beijing, possibly with a diplomatic freeze and more widespread consumer boycotts against Western brands, Eurasia analysts said.

3. ‘Boycottlite’

This is an exceptional scenario in which tensions between the West and China will ease and there will be “mild political statements about the Games” but no formal boycott, the analysts said, calling it “boycott lite.”

It is the least likely scenario and has a chance of only 10%, they said, adding, “There is currently not much cause for optimism about the trajectory of Sino-Western relations.”

Here, heads of state can refuse to attend the Games and cite scheduling conflicts or other non-political excuses. “Rhetoric would fall far short of enthusiastic acceptance of Beijing as host, but there would be no declaration of a boycott and no presentation of a unified Western position,” the report said.

A boycott of the Olympics would “reduce any soft power dividend” that Chinese President Xi Jinping hoped to get from the event, providing Beijing “with a platform to promote its global status among the domestic public and show a positive image. radiate to billions of foreign viewers. ”said Eurasia analysts.

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

Consumer companies based outside of China are increasingly trying to find a balancing act – projecting an image of human rights concerns onto consumers outside of China, while on the other, trying to avoid being locked out of the vast Chinese market.

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

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

Still, the analysts say most companies are likely to choose to participate in the Olympics because “the potential cost of losing access to the Chinese market is likely to outweigh concerns about a Western consumer response,” which Eurasia predicts. that it will probably be short.

– CNBC’s Arjun Kharpal contributed to this report.