The upcoming 2008 Olympics is a source of pride for many of China’s 1.3 billion people, a coming out party for the world’s newest economic and political power. The government has made every effort to ensure that these are “the best games ever.”


In August 2008, an estimated two million visitors and more than 20,000 foreign journalists will pour into Beijing. Anxious to make a good impression on the world, the government has carried out what may be the most ambitious urban makeover ever seen in modern times. The look of the city is being transformed by the day, with new roads, green areas, swirling flyovers, modern malls, and sleek high rise apartment buildings and office centers appearing throughout Beijing. Also welcome in an increasingly clogged city is a new and greatly expanded transport system.


China has invested some $40 billion in 14 new venues and another dozen or so upgrades — more than twice as much as the $16 billion Greece paid to prepare Athens for the 2004 Summer Games. The total investment could climb much higher when other infrastructure projects are included.


Experts say the scope and complexity of the Olympic projects are unprecedented. Beijing officials, aware that the international spotlight will be turned on the city as a result of the Games, chose the leading names in international architecture to give the city a modern look.


A consortium led by Swiss-based Herzog & de Meuron Architekten of Switzerland built the US$500 million main arena for the Olympic Games, with a design that looks like a giant bird’s nest. The National Stadium — made of interlocking bands of gray steel covered with a transparent membrane and a retractable roof — can accommodate 100,000 spectators and will host the opening and closing ceremonies.


An Australian-Chinese consortium led by Sydney firm PTW Architects Australia designed the US$100 million National Swimming Center. The company’s Watercube’s (H2O3) design is made from state-of-the-art plastic material designed to react to lighting and projection to create an interesting visual and sensory effect. The box alternates between transparent and translucent.


The state-of-the-art Olympic Water Park is being built in the suburban Shunyi district and will be the third largest arena for gold-vying athletes. As many as 32 gold medals will be up for grabs here, including marathon swimming, rowing, canoeing and kayaking. The builders claim this is the most advanced venue in the world for rowing and canoeing, and that it’s the first to have both a flat-water area and a competition course for slalom.


Construction has not been trouble-free. Beijing’s announcement that the cost for the “the best-ever Olympic Games in history” would be some US$37 billion led to questions about whether the cost of construction would pay off in post-Olympics Beijing. Work was halted from July 31 to November 10, 2004, while the State Council went back to the Olympic drawing board. Work resumed on several key sites, including the National Stadium and the National Swimming Centre, at the end 2004, but with some costs cut. Still, the price tag for the Beijing Olympics is expected to stay high due to security and safety concerns.


Post-Olympics Use


Niu Wei, a media coordinator for the Beijing Organizing Committee for the Games (BOCOG), says the Beijing municipal government established an office to oversee Olympic venue construction and urban environmental protection. A market-oriented process was adopted, she adds, with public and private investment both utilized to cover the costs of construction. About 50% of this is covered by central and local governments, with the remainder coming from public investment and donations. The Water Cube, for example, was paid for with donations from overseas Chinese. “Because most of the venues are funded and built by private companies and consortiums through bidding, after the Games they will enjoy the rights to run the venues for 30 years,” says Niu.


Government plans call for venues to factor in post-Olympics cash-generating functions, Niu notes. “After the Games, all the venues will be fully used to meet the needs of Beijing citizens. For example, the Bird’s Nest will be used for large-scale cultural and sport events after the Games; the Water Cube will be used as a large water amusement park and swimming center for Beijing citizens.”


All the venues located in universities will be used by teachers and students, she adds. The Olympic Water Park, located in the suburb of Shunyi, 30 minutes outside of downtown Beijing, will be used for competitions, training, recreation and fitness, and will later become the largest holiday resort in northeastern Beijing.


Booming Accommodation Facilities


One of the most important projects has been the addition of the much needed new Terminal 3 at the over-crowded Beijing Capital International Airport. The state-of-the-art terminal, which opened earlier this year, is one of the most impressive airport facilities ever built.


The Norman Foster-designed terminal, which covers some one million square meters, is the biggest in the world, with a combined surface area that is larger than all five of Heathrow’s terminals, and twice as large as Hong Kong’s Chek Lap Kok. It also has a 3,800-meter-long by 60-meter wide runway to accommodate the biggest aircraft in the world, the Airbus A380.


In addition, a high-speed light rail connection will whisk travelers along the 28 kilometer stretch between the airport and the Dongzhimen station in less than 20 minutes, making four stops along the way. The light rail station is linked with Beijing’s subway system, and so transportation is seamless. Passengers will be able to check in for their flight downtown and get rid of their bags before heading out to the airport.


In addition, a number of new subway lines have come on line prior to the Olympics, and more are now under construction. The additions will go a long way to relieving congestion in Beijing and making it easier to get around the city.


Beijing has also seen the arrival of dozens of new international hotels around the city, including the Ritz Carlton, Regent, Intercontinental, Marriott, Sofitel, Park Hyatt, Four Seasons and Mandarin. While a few months earlier there was talk of severe shortages of hotel rooms for the Olympics period, industry sources are now predicting that there could be a glut of hotel rooms on the lower end of the scale. And even top hotels are worried about occupation rates post-Olympics as a result of the sharp increase in five star properties around the city.


“There has been news recently that there’s an unexpected oversupply of hotel rooms, even for the Olympics,” says one hotel executive in Beijing. “And if the Sydney Olympics is anything to go by, there will be a drop. But I think that China is a unique situation. Because it’s in its growth period, the impact may not be as dramatic, and it will pick itself up sooner rather than later, with a better infrastructure, better trained people and hopefully a more mature business environment.”


In order to spruce up the city for the throng of Olympic visitors, a number of other dazzling structures were built around the Chinese capital.


Well-known Dutch architect Rem Koolhaas designed the 575,000 square meter broadcast headquarters for China Central Television (CCTV). The estimated US$750 million complex employs a continuous loop of horizontal and vertical sections rising 230 meters into the sky.


Right next door is the glittering Television Cultural Center (TVCC), also designed by Koolhaas’ radical Dutch firm ODA. The building, which rises and falls like a mountain wrapped in metal, is home to the new 241-room Mandarin Oriental, with its 21-story atrium. Another new and impressive structure is the sleek Park Hyatt, a 63-story, 237-room boutique hotel, penthouse and condo residence, and retail complex flanked by two office buildings.


Paul Andreu of France, the chief architect of Aeroports de Paris, designed the futuristic National Grand Theater. Andreu’s very controversial design features a titanium and glass-dome that appears to float on water standing over a three-theater complex. Visitors to the US$365 million venue, which opened in December 2007, have to board escalators to travel through the submerged lobby.


Environmental Concerns


Environmental pollution continues to throw a cloud over the Beijing Olympics. Despite government promises to clean up Beijing, the air in and around the city remains seriously polluted and a potential threat to a successful Olympics. The International Olympic Committee has said that it may have to postpone some long distance events if the air quality doesn’t improve. At least one foreign athlete has pulled out of the Games due to health concerns, some athletes are considering wearing masks, and some teams have even said they might leave their athletes in a neighboring country until the day of the competition.


The on-going problem has jump started officials into action. In late February, drastic measures were announced, including the temporary closure of factories in a large swath across northern China and the halt of building projects in Beijing three weeks before the games start. There is also a plan to restrict the number of vehicles on Beijing streets, with odd and even license numbers allowed on the roads on alternating days.


According to the announcement, polluters in Hebei, Inner Mongolia, Shandong and Shanxi provinces will have to slow or completely halt production during the summer. This policy has led to concerns that the move to limit industrial activity in the area, which accounts for 28% of China’s industrial value-added, could affect China’s economic growth.


However, a report in the Asian Economics Weekly played down concerns, saying that the closures would only affect the immediate areas around Beijing, that elsewhere in the region only the bigger polluters would be targeted, that the shutdown would only last four to six weeks and that affected companies would be able to temporarily shift production to other parts of the country.


Finally, the report said that authorities were likely to have better luck in tackling pollution over the next few months than at any time in the recent past. The authors attributed the failure to the “pro-growth priorities” of local governments and Beijing’s lack of influence over those leaders, but said that the situation was likely to change as soon as the Olympics became a focal point for political concern in the run-up to the Games.


Little Impact on China’s Economy


Economists are asking what impact the Olympics will have on China’s economy in general. Traditionally, host cities experience a rise in GDP growth in the year of the Olympics followed by a year of slower growth. However, the general consensus is that the Beijing Olympics will have no effect on China, primarily due to the massive size of the national economy in relation to Beijing.


In a recent report on the Olympics, UBS economist Jonathan Anderson asked and answered his own question: “So how important are the 2008 Olympics for the Chinese economy? From a macro point of view, we don’t think they’re important at all.” UBS examined recent Olympics in places like Athens in 2004, Seoul in 1988 and Sydney in 2000, and determined that these Olympics were “a big deal” for those economies. However, the report said that the cities above accounted for 20% to 40% of the total national population and an even higher chunk of national income.


Anderson said that Beijing, however, accounts for just 1.1% of the Chinese population, which is the lowest ratio for any Olympics in the past 30 years.


Stephen Jen and Luca Bindell of Morgan Stanley reached a similar conclusion in a February report titled, “When the Torch Burns Out, Beijing Will Still Go for Gold.” “The slowdown in U.S. GDP in 1984 (Los Angeles) is miniscule; in 1996 (Atlanta), U.S. growth actually accelerated, for the simple reason that what happens to a city in a big country shouldn’t dominate the country’s GDP.”


The Morgan Stanley researchers said further that while the U.S. business cycle would show weakness leading up until August 2008, that it would gain strength following the close of the Games, giving China a boost.


The UBS report also examined concerns that the Chinese government was holding off on important macroeconomic adjustment measures until after August 2008. The concern among some is that the government does not want to see either the real estate market or the stock market plunge to preserve social stability in the lead-up to the Olympics.


Anderson said he saw nothing in the economy that warranted an “adjustment response,” and that, therefore, UBS doesn’t see the government holding back on measures. The only exception he cited was the renminbi exchange rate: UBS experts “clearly feel that the Chinese authorities should be moving much faster.”


Citibank Global Markets predicts that the Olympics will not have a major impact on the local stock market, noting that Olympic-related investment is only a small proportion of the total investment. The research outfit said that total investment in the Olympics was an estimated RMB280 billion spread out over seven years of investment, making the average annual investment equal to only 13% of fixed asset investment in Beijing in 2007, or just 0.43% of total fixed asset investment nationwide.

Li Yifu, the Peking University economist who will assume his position as chief economist of the World Bank at the end of May, in an interview with the People’s Daily earlier this year played down the possibility of a “post-Olympics bubble,” saying that the huge investment in infrastructure construction, strong domestic consumption and the development of high tech industries will keep the economy rolling long after the Olympic Games come to an end.

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