U.S. ‘likely to engage in a diplomatic boycott’ of Beijing Olympics: Eurasia Group China Associate

The 2022 Winter Olympics in Beijing may be boycotted, according to the Eurasia Group. Eurasia Group China Associate Allison Sherlock joins Yahoo Finance Live to discuss.

Video transcript

ZACK GUZMAN: There was a piece of that letter, of course, that tied back to China, that Jamie Dimon also pointing out that China, in his view, looks at the way that the US leaders here-- that America, as a country, is in decline. And we've talked a lot about US-China tensions. Of course, the Olympics slated for Beijing in 2022, a year away. But that doesn't mean that it's not already proving controversial now as a sign of the tensions between US and China. Talks of boycotting the games were already swirling until the State Department walked those back this week.

But given there's a long way to go from now until the start of those games and the initiatives China have planned around that international event, including the potential launch of a state-backed digital currency, could a boycott land back on the table? Let's bring in Eurasia Group China associate Allison Sherlock to get into that. And Allison, you just wrote about this. And there's a bit of a nuance to the idea of a boycott because it might bring to mind a lot of people imagining athletes not going to the games. But that's not necessarily the only thing that could come of this. So how do you look at the issue of how the Biden administration might navigate this, given all the problems right now with China?

ALLISON SHERLOCK: Thank you for having me. So you're right. What our call is, is that the US, UK, Canada, and Australia are, at this point, pretty likely to engage in a diplomatic boycott. Now in this scenario, athletes from these countries would still attend. But there would be some efforts to delegitimize Beijing as the host, for example, Biden and others declining to attend the games and even having diplomats skip out on the opening ceremonies.

AKIKO FUJITA: Allison, I wonder if we flip the question here because there's so much uncertainty about what type of boycott could actually come about during the Olympics. What does the US have to gain by taking part in the Olympics? I mean, the athletes are separate, of course. We've heard China already say don't politicize sports. But this is a country the US has strongly been going after over the last several years.

ALLISON SHERLOCK: So, the Biden administration, you've seen them take a fairly-- you know, they've taken the view that China is a strategic competitor. And taking on China on human rights issues is one of the few issues right now in Washington where there's strong bipartisan consensus. But we've seen increasing calls from both sides of the aisle to take this opportunity, the symbolic opportunity to stand up to China.

ZACK GUZMAN: When it comes to the symbolic opportunity to stand up to China, there aren't many costs, as you noted there, for politicians to do that. So them not going to the games is fine. But when you look at the corporate piece of this, too, I wonder what that pressure might look like because it's a big market. There are a lot of companies out there that just can't stomach passing over that market. So what might that look like in terms of the pressure maybe from politicians on US companies to not show up and advertise there at the games?

ALLISON SHERLOCK: Right, so what you're describing is something we've been calling two-way reputational risk. Essentially, companies can't please both sides because you have consumers in China, who have proven willing to boycott Western brands, as we recently saw with H&M, while on the other side, you have US lawmakers trying to crack down, an example, for-- on imports of goods made in Xinjiang. So it's really become quite difficult for companies. And really, their only option here is to join together and at least come up with a coherent joint statement on where they-- why they're supporting the athletes in these games.

AKIKO FUJITA: Allison, how do you assess the economic impact to China of any kind of boycott? I know you've gamed down a number of scenarios. But it does feel like China has sort of backed off from the Olympics being this big unveil for the new future for the country. If there is that scenario you talked about in which there's a partial boycott, what's the hit to the economy?

ALLISON SHERLOCK: So, really, for Beijing, this is a hit they're very able to absorb. There would be very little risk to President Xi Jinping's domestic standing. And this is for a lot of reasons. One, Beijing has been able to lead China out of the pandemic with a fairly strong economic recovery. And that economic strength has given-- has made China bold in its dealings with other countries. For example, when the EU recently imposed sanctions on Chinese officials over the Xinjiang issue, China fired right back, even though it could potentially risk a huge investment deal that the EU has yet to ratify.