If China is indeed about to buy into Liverpool Football Club it would represent a new direction in its international investment programme – but one that could make sense for three reasons.
First, we know that China is anxious to invest its huge foreign reserves in something other than foreign government securities and in currencies other than the dollar. Up to now much of the surplus has been held in US treasury securities, but the value of these has fallen and is expected to fall further as the dollar is devalued against the yuan. China has invested heavily in gaining access to raw materials, particularly in Africa, and private investors have acquired European companies, including Volvo. While investments in the UK have been limited, there have been suggestions that Chinese banks might join in creating a new retail bank in the UK.
Second, while China has sought trophy assets abroad, there is great interest in the top brands of the West. This is particularly evident in the joint ventures in China itself, with Audi, Mercedes and BMW being successful because they are seen as producing something that cannot be developed locally. They bring knowledge of how to build the product as well as the actual output. So a football club would bring knowledge of the game as well as being an investment.
Football is becoming more important in China and the authorities recognise its global significance. But the country's performance at a national level has not been inspiring and there may be a feeling that the Chinese need to learn from Britain – particularly from the way the game is played at a club level.
If the deal goes ahead, China is not just buying a brand. It is buying a feeling for a great leisure industry.
In the coming years China will move away from being principally a manufacturing nation to one where services and leisure will be more important. Making that transition will be a great challenge. Investment in football is part of that transition, a small one in financial terms but a huge one in global influence and attention.