Beijing Olympics Games 2008, a menace in disguise?

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Recent views indicated that China will likely to suffer from a post-Olympics downturn, due to the shrinking of investment momentum, thus affecting stock and commodity markets. A study from Bank of China, one of the official sponsors of Beijing Olympics 2008 showed that 9 out of 12 hosting nations had suffered from a post-Olympics downturn syndrome. <br><br>China is a unique case. Firstly, being one of the largest and fastest growing economies, China has sustained 20 years of stable growth and prosperity. Dubbed as the world's factory, China's economy is still principally manufacturing driven, thus Beijing Olympics will aid China in her efforts in building the nation's international image more than on economic sense.<br><br>If we look at China in a 10-year horizon from 1997 to 2007, we can see a series of project and event catalysts which contributed to a sequence of economic and social wins in various cities, subsequently generating a period of expected high growth momentum.<br><br>To name a few, the return of Hong Kong in 1997 and Macau in 1999 to China created economic integration and spur increased, but healthy business competition resulting in a 5 jump in GDP growth as of year 2000 after the Asia economic crisis.<br><br>In 2001, the long awaited entry into the World Trade Organization (WTO) and the successful bidding of Olympics 2008 further accelerated investments and domestic consumptions, leading to a double digit GDP growth in 2003 onwards.<br><br>Later in 2006, the completion of mega projects - the world largest hydropower project - Three Gorges Dam and the world's highest train route- New China-Tibet railway line further boasted both local and national business developments.<br><br>Secondly, it is wrong to say China is one market by itself.<br><br>To be precise, China is a collective market with different cities having their own unique economies and city developments As such, the Chinese government is putting in various catalysts like the Olympics and mega construction projects into strategically positioned cities to drive economic growth. For instance; Shanghai sets to reinforce itself as a finance and trade center of China, will be hosting Expo 2010, after Beijing Olympics. Together with the construction of a RMB 200 billion Beijing-Shanghai high-speed railway, we can expect increased accessibility and economic facilitation between the 2 major cities.<br><br>Thirdly, though Beijing being the centre piece of Chinese educational, political and cultural centre, it may be economically too small to affect China's overall economy. Still, Beijing is likely to experience a post-Olympics downturn, but the degree will be largely based on how the Chinese government's measures in ensuring a smooth and soft economic landing.<br><br>With Beijing's population accounting for 1.1 of the national total and city's economic output of 3 out of the national GDP, the post-Olympics impact on the overall economy is negligible. Furthermore, Olympics related investments (US$40billion) for the past 3 to 4 years accounts for only 0.3 of China's overall economy.<br><br>Despite a popular belief that Olympics will have a significant spill over effects towards other cities, we believed that the main spillovers will still largely goes to the advertising, tourism and retail sectors An estimate of half a million foreign tourists will come not just to Beijing for the Games, but also likely to visit other Chinese cities.<br><br>To sum up, The Chinese government is not banking on Beijing Olympics to bring in the long term economic benefits but rather leveraging it as a showcase to the world that China is economically and socially ready to embark on its next chapter of growth. Of course at the same time, China is facing some serious economic challenges of rising real estate and stock market prices which may result in a bubble burst, putting China into an economic standstill.

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