China's Economy and the Beijing Olympics

Summary

China will host the 2008 Olympic Summer Games from August 8 to 24, 2008.
Most of the events will be held in the vicinity of Beijing, with selected competitions
held in Hong Kong, Qingdao, Qinhuangdao, Shanghai, Shenyang, and Tianjin. Since the
International Olympic Committee's decision in July 2001 to select Beijing as the host
for the 2008 Olympics, China has spent billions of dollars for facilities and basic
infrastructure in preparation for the international event. China anticipates that the 2008
Olympics will provide both short-term and long-term direct and indirect benefits to its
economy, as well as enhance the nation's global image. However, the experience of past
host cities and China's current economic conditions cast serious doubt that the Games
of the XXIX Olympiad will provide the level of economic growth being anticipated.
This report will not be updated.

China eagerly awaits the commencement of the Games of the XXIX Olympiad on
August 8, 2008 in Beijing. After seven years of preparations, China will host the
preeminent sporting event of the year. In the words of Premier Wen Jiabao, the 2008
Olympic Summer Games provide an opportunity to demonstrate to the world how
"democratic, open, civilized, friendly, and harmonious" China is.1 In addition, much like
the two previous Asian hosts for Olympic Summer Games -- Japan in 1964 and Korea
in 1988 -- China views the 2008 Olympics as a showcase for its modern economy and
a springboard for future economic growth.

To the Chinese government, hosting the Olympics also signifies a turning point in
its economic development. It provides an opportunity to begin the shift from an economy
based on being the assembly platform for global manufacturing to one geared to providing
goods and services for China's growing and prosperous middle class. The 2010 World
Expo in Shanghai will be a similar opportunity to highlight China's economic progress.

In an effort to ensure the success of the 2008 Olympics, the Chinese government has
invested billions of dollars in sports facilities, housing, roads, mass transit systems, and
other infrastructure. China hopes that its investments, when combined with the goodwill
generated by the successful completion of the Olympics, will attract more tourists,
businesses, and investors to China -- and foster future economic growth in its wake. In
addition, to counteract possible negative publicity about labor and environmental
conditions in China, the government passed new labor laws and is promoting the 2008
Beijing Olympics as the "Green Olympics."2

If the post-Olympic economic records of past host cities and nations are any
indication, however, it is uncertain that Beijing and China will see substantial economic
benefits from this summer's games. Academic research on "mega-events" -- such as the
Olympics -- has found that their economic benefits generally fail to meet pre-event
expectations, and sometimes fall short of the costs of staging the event. Certain aspects
of China's current economic circumstances make it more likely that the economic gains
from the 2008 Beijing Olympics could be smaller than some pre-event expectations.

Endnotes

1
Lee M. Sands, "The 2008 Olympics' Impact on China," China Business Review, July-August
2008.
2
There is a separate web page -- [http://en.beijing2008.cn/12/12/greenolympics.shtml] -- for
Beijing's "Green Olympics" that includes numerous articles on the various measures taken to
reduce the environmental impact of the 2008 Olympics.