[Ed. This story below ran in the March 2015 edition of GCM China, a quarterly magazine published by the Golf Course Superintendents Association of America from 2012-2016, in Chinese, for golf industry professionals working in the PRC. The New York Times weighed in this matter in April 2015.]

By Hal Phillips
The overriding mood of the Chinese golf industry in 2015 is one of uncertainty. While the central government has not altered its official stance toward golf since 2004 (when course development was specifically banned), close to 500 new golf course projects have opened or been formally undertaken during this 10-year period. Clearly, there is uncertainty within the central government as to how, when and where to enforce the ban — and how to deal with courses built in spite odf the ban.

There is, in turn, uncertainty on the part of course developers, who have witnessed the successful development of so many projects, since 2004, and have, at the same time, witnessed many projects suspended by the same government since summer 2014, when the 10-year-old ban was enforced anew — with increasing but selective frequency.

There is uncertainty on the part of Chinese golf industry observers — international vendors, native course personnel and golfers themselves — who possess a range of opinions re. where things are headed but dare not speak publicly, for fear of endangering their business interests, employment and club membership values. ]

GCM China spoke to a dozen different sources for this story, in an attempt to shed light on the situation. None wished to be identified. We chose to quote them here anonymously, because the subject matter is so important to our readers across the Chinese golf industry. Their opinions, taken together, reflect widest, most fulsome perspective on where exactly the golf industry stands today, and where it is headed.

There was broad agreement among those interviewed that the change in government policy took hold in late 2013, early 2014.

“We began to see and hear of more and more reports on policy enforcement and the tearing up of courses across the country,” said one golf course architect with design experience in China stretching back prior to 2004. “This began largely with the halting of new construction but soon began to migrate into the shutting down and tearing up of existing courses, even those with active memberships. This crackdown, I believe, was tied largely to the 2012 change of the Politburo and the very public crackdown on government corruption. Government officials across the country, upwards of some 20,000 in 2014, were arrested and jailed, some quite prominent.”

It’s important to distinguish here between local and central governments in China, something GCM readers understand better than anyone. When the golf course ban was instituted in 2004, that was a central government directive. However, in spite of the ban, local governments at the provincial and city levels, viewed golf development as a way to build local economies and employ local citizens. These local governments were the entities that “approved” golf projects. There is today no protocol for central government consideration of golf projects.

As a result, hundreds of golf development projects essentially flew, in various degrees of disguise, under the central government radar thanks to implicit local government cooperation — and a desire on the part of developers not to flout the central government’s official anti-golf stance. In order to avoid central government detection, many projects were classified by local government documentation not as golf courses or country clubs but sports facilities, parks and forested landscapes.

In June 2014, the central government created four classifications for all existing golf courses: those slated for shutdown, those slated for major renovation, those slated for more minor “rectification”, and those simply under “review”, which is seen as the safest of the four groupings.

There was broad agreement among sources that, since the beginning of 2014, the central government has been busy visiting and assessing all the golf facilities in the country — those in operation, in addition to those still in development. It is assumed that all courses will eventually receive one of the four designations, though subsequent actions, according to this classification, have not been made clear.

The situation is that much more murky because some courses have indeed been shut down summarily. Others have been informed that portions of the landscape must be modified, moved away from water resources, or returned to agrarian use; still more have been informed that some unspecified rectification will be required.

But the majority of courses have not been notified of anything. Not yet.

The first courses to be affected by the government crackdown were, not surprisingly, those closest to Beijing, the seat of central government power in China. Initially, there were rumors of pending taxation on water use on those golf courses — a legitimately pressing issue due to longstanding drought conditions in the north. But this was simply a preliminary indication of serious government intervention in all things golf. According to a golf journalist based in Beijing, golf course water usage and other environmental factors were and continue to be a mere pretext for singling out golf developments that flouted the 2004 ban — meaning the vast majority of golf courses in China today.

“I have heard that some courses are being proactive and looking into recycled-water alternatives — and the so-called new government water-use fees seem to be very sporadic in their implementation and how much the local government will charge,” said one Beijing-based course superintendent.  “I’ve also heard there could be new land-use fines. I don’t know how clubs can be viable if they have to keep paying the government money — but still don’t receive official papers or permits for the club [in return]. More clubs just shut down over the last month, so the industry is just crawling along.”

Another superintendent explained why his club was shutdown, before it even opened for play. “The main reason why my course was suspended is the protection of a nearby water source — because the media and public and government misunderstand the pollution caused by golf courses. So in recent times, courses close to water resources, such as lakes, rivers, streams and natural parks, were all inspected and forced to reevaluate the environmental effects. Other courses that are taking over farmland, or once took over farmland, are definitely not permitted right now. Existing courses are all being evaluated by the government now.”

Some Chinese golf courses that have not been the subject of review have been busy filling in bunkers and planting trees — on greens — in an effort to avoid detection, as a “golf course”, by roving government inspectors.

According to the golf journalist, “Some courses had already planned to use recycled water, but it’s just planned. After all, there is still no a clear law about hiking the water tax on the golf industry. But ‘no clear law’ always means a bigger problem. In China, nowadays, the most severe crisis in golf is the ‘Cleaning Up’ movement, not the water matters. Since chairman Xi Jinping took office, the government has tried to clean up the sport of golf. During last six months, they have already removed several courses (even when they are about to open!) in Beijing, then Shanghai, and now Guangdong.

“It is no exaggeration to say, the golf course industry is in one of the most severe recessions in 30 years of Chinese golf history.”

Most observers agree that the central government’s new interest in golf’s environmental impact is simply an excuse to make a larger, political point — namely, that too many golf courses were built illegally following the 2004 ban.

One business development executive for a course design firm fleshed out this perspective — and reinforced that a golf crackdown was related to a broader government-corruption crackdown — by detailing golf-related restrictions placed upon current government employees.

“Here is the latest official red tape from the Guangdong provincial government,” he said. “No government staff shall own or acquire golf membership certificates of any kind. No government staff shall take any positions in golf clubs or golf organizations including honorary positions. No government staff shall use public funds on golf membership cards, VIP cards, other cards with favorable terms, or golf equipment — no government staff shall take any of these above mentioned items from enterprises or individuals. No government officials shall play golf during business hours or play golf with public funds. No government officials shall play golf with those who are within their service objective or those who are under their management. No one shall pay for the expenses of golf for any government staff or his relatives. No government staff shall attend any golf activities or tournaments organized by private enterprise. No government staff shall be involved in any form of golf gambling.”

The larger point here is well taken: Placing these hardline restrictions on government staff is a likely prelude to penalizing courses built during the ban.

“With regard to golf course closure I have heard two rumors,” the business development executive said, echoing sentiments related by others interviewed for this story. “One is, 80 courses all over China will be shut down eventually, before the 30 June 2015 deadline. The other is, Guangdong province alone will have to close down 100 courses (including 15 in Shenzhen). Shanghai will close down 27, and Hubei province 14.”

These official anti-golf stances (which remain mere rumors) are highly ironic — creating further uncertainty within the industry — because, in other demonstrable ways, golf is a growing sport that Chinese clearly enjoy playing, as individuals but also as part of teams officially representing China.

“The Olympics will be a big push,” said one course architect, noting that China has a national golf team that will certainly compete at the 2016 Olympics in Rio de Janeiro. Most Olympic-designated sports receive de facto support from the central government. “More and more Chinese are traveling outside of China to play golf. The Presidents Cup in Korea [8-11 October 2015] is something else that will bring huge awareness to the sport in China. The Chinese have always been very supportive of national sport and culture. In the future, I see changes. Maybe some of these bodies will come out with a mandate that says, if you do develop golf, here are the standards. But right now, development standards are seen as too much of an endorsement. “

Another architect was less positive when it comes to the fate of future development: “The central government is in the process of documenting all the courses in the country. Following this documentation, a report will be distributed. I believe this report will surface sometime in 2015, but most likely not until the summer, maybe even later. Many people believe this report will establish a policy to deal with existing and new course development with strict guidelines. I do not agree. I believe it will deal largely with the elephant in the room: all the existing illegal courses. I do not believe new construction will be dealt with at this time.

“This report (possibly a policy) will name courses to de demolished, courses that can stay, and courses that will need remedial work to be done over a 1-year period — to become compliant with the standards necessary to remain. These issues will include the avoidance of certified farmland, villager relocation and compensation, avoidance of forest preserve, water supply, and water runoff.”

One veteran of the China golf industry, whose firm supplies golf courses with various course-related supplies, said the central government is not necessarily equipped to assess the environmental aspects of course development. This will clearly affect its ability to assess golf courses as part of this report, and to monitor their environmental impact going forward.

“The real interesting cases will be courses that have permits and are least nominally legal, in the manner they were developed, but sit on or near drinking-water reservoirs,” this vendor said, noting that permits in these cases were issued by local, provincial governments, not the central government. “They are just cloaking this crackdown in environmental terms. The question will be, how do they do the monitoring? We’ve worked with their official labs. They are not up to the task.”

The business development source was more optimistic: “I personally think it is good for the industry in the long run. I am hoping the central government will issue the official regulations for getting permits and constructions of new golf courses early in 2015, before the Beijing Golf Show [scheduled for 13-15 March 2015]… My general feeling is that the tension on golf is going to loosen up toward the second half of the year, 2015, and the regulations will be released very quickly in the near future.”

A course construction professional is less convinced. He may have put it best (meaning, with the appropriate tone of uncertainty), when he said, “The Chinese government has always been difficult to predict, no matter what the case, and the same goes with the current state of the China golf industry. We’ve all heard the same rumors for months now, but to be honest, nobody knows! It’s all guesswork at this stage and anyone who tells you different is just relaying another rumor.”