The forbidden game: China's on-again, off-again war against golf.

Commentary about business and finance.
March 9 2010 10:04 AM

The Forbidden Game

China's on-again, off-again war against golf.

Check out Dan Washburn and Ryan Pyle's photo essay " China's Golf Obsession" in Foreign Policy.

(Continued from Page 1)

"Don't worry—the course is not going to become farmland," one of several workers who remain at King Valley said reassuringly during a visit in January. He said they were repairing the irrigation system and, since the greens were not destroyed, the course could be rebuilt very quickly. How could this be possible? "The local government has certain guanxi with our company," he said.

The greens at the King Valley golf course remain untouched. Click image to expand.
The greens at the King Valley golf course remain untouched

That guanxi, or favorable relationship, would seem to be strained these days. When Beijing's focus turned to King Valley, local officials ran for the hills. Many denied knowledge that a golf course existed inside the "Anji China Ecotourism and Fitness Center," as King Valley is officially known. (To get around the 2004 moratorium on course construction, "golf" never appears in planning documents for golf facilities in China.) Their case was flimsy: King Valley played host to a stop on China's domestic pro golf tour last summer; it's the official training center of the provincial golf team; and the large sign the local government installed beside the highway included the stylized silhouette of a man swinging a golf club. "Government officials go there all the time," said a village shopkeeper. "Only a ghost would believe their claims."

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Despite the workers' assertions at the course, sources familiar with the situation say the company behind the project—Hangzhou-based real estate firm Handnice Group—is in no hurry to pay for the necessary repairs. Many in Jianshan believe the course destruction was a calculated move by local officials, a grand display intended to shield them from punishment from Beijing. Without assurances that the project is fully legal, the existence of a course like King Valley will always be dependent upon the word of local bureaucrats.

The Handnice Group is no innocent bystander here. The risks associated with opening a golf course in China, though seemingly minimal in recent years, are no secret. And while official land designations in rural areas often change on the whims of those in power, it was obvious villagers were farming on a portion of the land that is now a golf course. In fact, the company paid close to $1.2 million in fines for illegal land use between 2006 and 2008. But after each fine, sources say, the local government urged them to carry on with construction. The fines were viewed as a cost of doing business.

As is often the case with major development projects in China, hundreds of villagers were relocated to make room for King Valley. This is typically presented to farmers as a choice, but more than one Jianshan resident admitted their departure from the land was "kind of enforced." Reports suggest this process got messy. The most heated disputes arose over compensation—they usually do—and the noise surrounding a few key blowups may have gotten the project on the central government's short list for investigation.

Because the state owns all land in China, the developer pays the local government, which then distributes payouts to the villagers. Much of the money gets caught in the government filter—recent data suggests more than half of local government revenues come from land sales. One elderly man in Jianshan said the $15,000 settlement he received was not enough to cover the cost of his new home, and that the $200 he receives in "rent" each year from the golf course (where a round can cost $120) is "definitely not enough." He shrugged his shoulders and added, "But what can you do?"

It's unclear what's next for King Valley. When asked for a status update, a worker at the Anji land bureau said only "that's already been dealt with" before hanging up the phone. Another source said "a conclusion has been reached" but it has yet to be made public. Meanwhile, golf course construction in China continues to chug along. One industry veteran, who says his firm has survived "crackdowns" in the past, didn't sound too worried. The number of leads and new projects he discovers during his monthly trips to China remains "astronomical."

"I've been telling people if they shut down 50 percent, even 70 percent, of the projects there are still too many of them," he said. "A hell of a lot of golf courses are still going to be built."

Alice Liu contributed to this report.

Dan Washburn is a Shanghai-based writer. For more on the development of golf in China, visit his Par for China Web site.

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