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.

A portrait of Chairman Mao at a restaurant next to the Anji King Valley Country Club. Click image to expand.
A portrait of Chairman Mao at a restaurant near the Anji King Valley Country Club

JIANSHAN VILLAGE, Zhejiang, China—Last November, when the Chinese government held a press conference to announce its most recent crackdown on illegal land use, it highlighted five investigations. Three involved heavy industry: a coking plant, a plastics factory, and a rare-earth metals mine. The other two were about golf courses, and they were the ones that made the headlines. "Golf defies rules to gain ground," screamed China Daily.

While the announcement raised a few eyebrows in China's golf industry, it was easy to brush it off as another toothless threat from Beijing. Almost all of the nation's 600 or so completed golf courses are illegal in some way. In order to operate as a golf business in China, you need to have an official license. Since 2004, however, there's been a moratorium on course construction in the country, making the acquisition of such a license impossible. Nevertheless, about 400 new golf facilities have opened their gates in the past six years.

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The most generous estimates put the number of golfers in China at a few million—statistically zero percent of the population. While the game is growing in popularity, in many developers' eyes golf courses exist primarily as a means to sell the million-dollar homes that get built around them. On a recent trip to China, a representative of an American course design firm compared the goings-on here to the Oklahoma land run combined with the California gold rush. China, the nation that banned golf development, had somehow emerged as the only country in the world still in the midst of a golf boom.

That was before the government started digging up fairways. The bulldozers arrived at dawn in early December. There were more than a dozen lined up outside the gate of the Anji King Valley Country Club,140 miles southwest of Shanghai. The convoy drove past the fountain, the bronze knight, and the Tudor-style clubhouse, and arrived at the multimillion-dollar 18-hole course that had been open for little more than a year and was scheduled to play host to a Ladies European Tour event this October. For 10 days, the excavators ripped up turf and snapped irrigation pipes in the soil below.

King Valley's punishment is the harshest thus far, but some in the industry believe government inspectors (the "Beijing golf police," as they have become known on the ground) could make their way throughout the country, one province at a time. Since the beginning of the year, the golf police have been frisking finished and unfinished golf courses throughout central China's Sichuan province, a hotbed of construction activity. Several projects there have been put on hold pending further review.

It makes sense that the "rich man's game" would get special scrutiny. While the Communists lifted their ban on the sport in 1984, golf still suffers an image problem in China, where a weekend round costs $160 on average. Critics have contended that such a high-consumption pastime runs counter to several of President Hu Jintao's primary concerns—among them, rural land rights and the widening gap between rich and poor. Farm land is a precious commodity in a country that must feed 21 percent of the world's population with less than 8 percent of its arable land. China has lost more than 30,000 square miles of agricultural land since 1996, and its current total of about 470,000 square miles is getting dangerously close to the 463,323-square-mile baseline the government believes necessary to sustain its massive population. As such, while golf-related construction accounted for a tiny fraction of the reported 42,000 cases of illegal land usage in China last year, it's good PR for the Communist government to say it's tackling such an elitist activity.

Ironically, it was the Chinese government's reluctance to embrace golf—or at least come up with a set of regulations intended to standardize its inevitable growth—that allowed things to get out of control. China doesn't even know how many golf courses exist within its borders. At the press conference in November, officials at the Ministry of Land and Resources said they were using satellite imagery to get a handle on the number. Back in 2004, when the moratorium was announced, state media reported that only 10 of China's then 176 known courses had received proper approvals from Beijing. One golf developer who wished to remain anonymous—this happens often when reporting on the legally nebulous word of golf construction in China—said the market remains "in chaos," with local governments continuing to approve golf projects despite not having the right to do so.

This was the case in Anji County, where King Valley Country Club is located. Anji had always been one of the poorer parts of Zhejiang province, with bamboo forests its lone claim to fame (some were featured in Crouching Tiger, Hidden Dragon). The area's top government official was fond of telling people he had two dreams for Anji: a university and a golf course. Ask anyone in Jianshan village, where that second dream came to fruition, and they'll tell you that King Valley was a pet project of the local government, designed to attract well-heeled patrons from nearby cities like Hangzhou and Shanghai to the impoverished countryside.

There is some evidence that this effort was successful. While Jianshan remains tied to the past—locals still refer to their "production teams," a holdover term from the pre-reform days of China's communal farming system—a walk through the village reveals many signs of growth: small factories manufacturing decorative bamboo wall-coverings, kitschy hotels and restaurants geared at tourists, and construction sites for new housing complexes. All of this followed the 2005 arrival of King Valley.

Parts of the King Valley golf course have been turned back into farm land. Click image to expand.
Parts of the King Valley golf course have been turned back into farm land

The official reason for King Valley's bulldozing is simple: The course's builders didn't have the proper approvals to develop the entirety of their 400-acre plot. (Nearly 35 acres of the tract were farmland.) Dig a little deeper, and things don't look that straightforward. A dirt path along a fence offers views of the golf course's back nine, where most fairways now look like freshly plowed fields awaiting planting season. But a closer inspection reveals peculiarities. All of the greens and tee boxes remain untouched, the cuts around them following neat lines. The greens, and what remains of the fairways, are watered and mowed daily. The cart paths are still there. So are the buildings and the landscaping. Smaller shrubs are wrapped in white plastic to protect them from the winter cold. (Click here for a companion photo essay on King Valley's bulldozing.)

"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."

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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