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Introduction
Since Comrade Deng Xiaoping’s Southern Tour Speech in 1992 and the adoption of the reform goal to establish a socialist market economy system at the 14th National Congress of the Communist Party of China, the state has raised new requirements for the management and organizational models of sports undertakings. Sports administrative departments began exploring sports management systems and operational mechanisms compatible with the socialist market economy. During this exploration, the development of the sports industry was prioritized as a crucial component of deepening sports reform and progressively expanded in scope. From the "Zhongshan Conference" convened by the State Physical Culture and Sports Commission in 1992, the Ninth Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2010 approved at the Fourth Session of the Eighth National People’s Congress, to Premier Zhu Rongji’s Government Work Report in 1999 and the Opinions of the Central Committee of the Communist Party of China and the State Council on Further Strengthening and Improving Sports Work in the New Era in 2002, the sports industry garnered sustained attention, evolving from a sector-specific issue to a strategic concern for national economic development. The state actively promoted the sports industry and created favorable external conditions. As an integral part of the sports industry, Wushu competitions embraced a historic opportunity for market-oriented development.
Driving Forces for the Marketization of Wushu Competitions
Deepened Reforms Launched the Initial Platform
The socialist market economy environment guided the rational transition of the traditional sports system, necessitating the establishment of a resource allocation model that optimizes the distribution and utilization of limited sports resources in the primary stage while accelerating sports development. Achieving this goal required three fundamental shifts:
Diversification of Allocation Entities: Transitioning from government-dominated resource allocation to a society-led, multi-entity model.
Market-Oriented Allocation Mechanisms: Replacing administrative regulation with a hybrid approach combining market and administrative means, prioritizing market-based adjustments.
Quality-Driven Resource Utilization: Shifting from quantity-driven expansion to a balanced system emphasizing both quality and quantity in sports resource allocation.
The establishment of this market-economy-aligned sports resource allocation system facilitated the transformation of sports development dynamics. It promoted diversified forms of public ownership in sports, synergizing policy tools with multi-stakeholder incentive mechanisms. These reforms mobilized societal enthusiasm, leveraged social resources, and enhanced the supply of sports products. Effective reforms liberated sports productivity, with sports consumption demonstrating unique potential in stimulating domestic demand and driving economic growth in recent years. Guiding sports consumption, nurturing sports markets, and developing the sports industry – a contemporary national strategy aligned with social trends–rationalized China’s sports governance and operational mechanisms in the new century. This not only generated market-driven momentum for sports but also institutional safeguards for the sports market’s expansion. As a component of the sports industry, the Wushu competition market now stands on this platform.
Rapid and Sustainable Socioeconomic Growth Provides Robust Support
As the foundation for sports development, economic growth stimulates societal demand for sports while increasing supply. Over two decades of reform and opening-up, China’s GDP has sustained rapid growth. Benefiting from economic progress, government investments in sports at all levels have steadily risen, maintaining a high annual growth rate of 14.7% – surpassing the 9.8% average GDP growth during the same period–with sports expenditure rising to 0.41% of total fiscal spending. From 2000 to 2020, China’s GDP is projected to maintain an average potential growth rate of 7.3%. By 2020, GDP in constant prices will quadruple compared to 2000, positioning China as the world’s third-largest economy after the U.S. and EU, with a population under 1.4 billion within a decade. This combination of rapid economic growth and controlled population expansion creates fertile ground for modernizing sports markets, including Wushu competitions.
Rising Income Levels and the Shift from Subsistence to Development-Oriented Consumption
As living standards improve, the Engel coefficient of urban and rural residents has steadily declined. For urban households, it dropped from 57.5% in 1978 to 44.5% in 1999 (marking a 13-percentage-point decline and reaching a moderately prosperous level), while rural households saw a decrease from 67.6% to 53.4% over the same period (a 12.5-percentage-point decline, transitioning from basic subsistence to moderate prosperity). In consumption structures, urban spending on food and clothing fell from 80% of total household expenses in the early post-independence era to 55.6% in 1998, with rural spending declining from 90% to 59.6%. The proportion of expenditures on goods decreased, while service-related spending – particularly on education, culture, and recreation – rose significantly. From 1992 to 1997, national cultural and sports consumption grew at an average annual rate of 5.1%, with urban and rural residents participating in an average of 3.45 sports activities per person. Between 1994 and 1998, urban sports consumption surged by 115%, doubling 1994 levels. At the 16th National Congress of the Communist Party of China, General Secretary Jiang Zemin outlined the goal of building a comprehensively prosperous society, emphasizing the holistic development of socialist economics, politics, and culture. These trends signal a structural shift in Chinese consumption from subsistence needs to enjoyment and development-oriented pursuits. The proportion of spending on sports – and by extension, Wushu-related consumption – will continue to grow. Even a 1% allocation to Wushu consumption would represent a substantial market, underscoring the vast potential of the Wushu competition market.
Accelerated Urbanization Unlocks Opportunities
The sports industry, in essence, operates within the framework of urban sports culture. The development of rural sports consumption and market cultivation in China heavily depends on the pace of urbanization – a critical indicator of national development and a pathway to dismantling the urban-rural dual structure. According to economists’ definition of a moderately prosperous society, urbanization should exceed 40%. However, China’s urbanization rate in the early 2000s lagged behind this benchmark. During the 10th Five-Year Plan (2001-2005), urbanization was prioritized as a socioeconomic goal through two strategies:
Expanding Urban Quantity: Lowering population thresholds for city designation and promoting satellite towns to transform 19,000 administrative towns into cities.
Diversifying Urban Functions: Emphasizing lifestyle-oriented cities, such as tourism hubs, commercial centers, and transport hubs.
Per China’s Forecast and Planning for City Establishment, 279 new cities were projected to be established between 2000 and 2010, raising the total from 668 to 1,000. Urbanization rates were expected to climb from 30.2% in 1998 to 45% by 2010 (matching 1990s global averages) and 55% by 2020. Coordinated development of cities across scales would optimize resource allocation (e.g., talent, capital, information) and foster sports market growth. If 18% of high-income rural households urbanized during the 10th Five-Year Plan, 150 million farmers would transition to non-agricultural sectors, potentially generating over ¥200 billion in annual consumer spending based on 1998 urban expenditure patterns.
Policy Support in the Current Stage
In 1999, Premier Zhu Rongji’s Government Work Report at the Second Session of the Ninth National People’s Congress explicitly urged “actively guiding residents to increase cultural, recreational, fitness and sports activities, and tourism consumption,” marking the first mention of sports in a government economic policy document. This signaled official recognition of sports as a strategic component of the tertiary industry and a driver of economic growth.
In July 1999, a landmark High-Level Seminar on Sports Industry and Economic Development was co-hosted by the State Council Research Office, the National Development and Reform Commission, and the General Administration of Sport. This event underscored the sports industry’s transition from a sectoral concern to a national economic priority.
Subsequent policy milestones reinforced this shift:
The 10th Five-Year Plan Outline (2001–2005) emphasized “developing competitive sports” and linked it to “raising household incomes and improving living standards.”
The Central Committee Document No. 8 (2002) stated: “As part of the tertiary sector, accelerating the sports industry aligns with China’s market economy reforms and strategic economic restructuring. It plays a vital role in expanding domestic demand, stimulating growth, and achieving modernization goals.”
These policies redefined sports development – not merely as a public welfare endeavor or a source of national prestige, but as an economic contributor through industrial expansion.
Wushu’s Enduring Historical and Cultural Legacy
Rooted in China’s ancient past, Wushu (martial arts) evolved as both a military discipline and an educational practice during the Xia Dynasty (c. 2070–1600 BCE). Over millennia, it has become a cultural emblem, embodying values of self-defense, physical fitness, mental cultivation, and moral refinement. The ideal of “excelling in both scholarly and martial pursuits” (能文能武) reflects its deep psychological resonance in Chinese society.
Wushu’s multifunctional appeal – spanning combat skills, health preservation, and spiritual growth – has sustained its relevance across eras. This cultural richness endows the Wushu competition market with unique developmental potential, positioning it as a bridge between tradition and modernity.
Marketization Level and Overall Landscape of Wushu Competitions
Currently, China’s Wushu competitions primarily include routine (taolu) and combat (sanda) events, organized in formats such as:
Routine Competitions: National Championships, Elite Championships, Youth Championships, Taijiquan Championships, Duilian (paired routines) Elite Competitions.
Combat Competitions: Sanda Championships, Youth Sanda Championships, North-South Sanda Star Showdowns, Wushu Hometown Competitions, Sanda Club Leagues.
Specialized Events: Shaolin Fist Competitions, Mulanquan Competitions, Traditional Wushu and Unique Skills Competitions, Wushu Fitness Method Exchanges, Water Stage Combat Challenges, Taijiquan Exchanges.
International competitions, such as China vs. Thailand Muay Thai Championships, China vs. U.S. Boxing Championships, China vs. Japan Karate Championships, and China-World Star Sanda Showdowns, are periodically hosted domestically.
Marketization Challenges in Routine Competitions
Since 1993, China’s market-oriented reforms prompted the Wushu Administration Center to phase out direct funding for the National Wushu Championships by 1995. Competitions shifted to a sponsorship model, relying on corporate naming rights and local organizers. However, ticket sales remain negligible.
Sponsorship: Annual sponsorship for routine events averages ¥200,000–400,000 (1995 – present), with occasional failures to secure sponsors due to low corporate returns.
Market Development: Routine competitions remain trapped in a planned economy mindset. While administrators acknowledge the need to “sell” competitions as products, critical market analyses – such as product quality improvement, production process optimization, and institutional restructuring – are absent.
Partial Breakthroughs in Sanda Marketization
Sanda, as a newer and more combative discipline, attracts slightly higher sponsorship (around ¥500,000) but still depends on administrative oversight. A milestone emerged in 2000 when the Chinese Wushu Association partnered with Xinjiang D’Long Group to establish Beijing Guowu Company, dedicated to promoting the King of Sanda Championship.
Media Collaboration: In 2001, partnerships with Hunan Satellite TV boosted the event’s visibility. By 2003, cooperation with CCTV aimed to expand market influence.
Limitations: Despite localized success, revenue streams remain narrow (primarily sponsorships), and systemic marketization (e.g., resource allocation, industrialization) lags.
Social Wushu Competitions: Public Welfare Over Profit
Social Wushu events, co-organized by the Wushu Administration Center and local governments, prioritize social impact (e.g., promoting fitness) over profitability. Funding relies on corporate sponsorships obtained through bidding, mirroring the national championship model. Local governments leverage these events for investment promotion rather than building self-sustaining commercial systems.
Administrative Dominance and Early Marketization Efforts
Both routine and sanda competitions operate under the vertical management of the Wushu Administration Center, which holds full responsibility for athlete training and event planning. Social competitions require administrative approval but are primarily organized by local governments. Key observations:
Current Focus: Expanding grassroots participation and public fitness, not profit generation.
Marketization Barriers: Resource allocation lacks competition and market-driven transactions; industrial chains remain underdeveloped.
Progress: Despite limited economic returns, initial steps (e.g., corporate partnerships, media engagement) signal the start of market-oriented exploration.
Market Structure of Wushu Competitions
The Wushu Administration Center (WAC) and the Chinese Wushu Association (CWA) operate as “two entities under one institution.” Although the WAC is tasked with administrative oversight delegated by the state, while the CWA nominally manages projects through grassroots networks, the WAC de facto controls the CWA in practice. Despite being registered as an independent legal entity, the WAC lacks full autonomy. As Zhang Faqiang, a key figure in China’s sports reforms, noted in 1997:
“Public institutions acting as legal entities are essentially entrusted agents. Their independence must be balanced with internal controls. A single directive from higher authorities can override their autonomy, as the overall interests of the state take precedence” [1].
Thus, the WAC holds dual roles:
- Administrative Authority: Regulating Wushu competitions through government mandates.
- Quasi-Economic Entity: Operating competitions with both public welfare and profit motives, reflecting a transitional hybrid of planned and market economies.
This government-enterprise integration grants the WAC monopolistic advantages:
- Imposing regulatory controls;
- Dominating critical resources (e.g., athlete registration rights);
- Crafting industry rules favoring its interests.
For example, the WAC co-founded Guowu Company to manage the King of Sanda Championship. A private sanda club seeking to participate in national competitions faces exclusion if local government-backed teams have already registered – a policy mirroring China’s pre-reform telecom monopolies. At the 2002 Sanda World Cup, Luo Weimin, Deputy General Manager of Guowu Company, bluntly stated:
“Supporting this event means aligning with the International Wushu Federation. There is no alternative.”
This underscores the WAC’s absolute monopoly over the market.
Market Regulations, Intermediaries, and Funding
Legal Framework:
Only a few policies govern Wushu competitions:
- Regulations on Commercial Wushu Organizations (1995, National Sports Commission);
- Related notices: Strengthening Sports Market Management (1994), Enhancing Sports Activity Oversight (1996), Accelerating Sports Club Development (1999).
These documents focus on administrative penalties, with limited application of civil or criminal laws, leaving the legal environment underdeveloped.
Market Intermediaries:
No specialized intermediaries exist. The WAC itself acts as both regulator and intermediary, stifling third-party involvement. Even high-profile events like the China vs. Thailand Muay Thai Matches (facilitated by China Sports Industry Co., Ltd.) relied on administrative influence rather than pure market mechanisms.
Funding Sources:
Following the 1993 Guidelines on Accelerating Sports Industrialization, the CWA adopts a “You Profit, We Develop” model:
- Partnering with corporations for sponsorships;
- Leveraging membership systems (e.g., Duanwei rankings) to raise funds.
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