Wei Yao/China Foto Press
Special Commentary: Olympics
The 2008 Olympics' Impact on China
From new construction projects to attracting the spotlight,
the Olympics will have a lasting effect on China
by Lee M. Sands
For the PRC leadership and most Chinese, the July 13, 2001 International
Olympic Committee (IOC) announcement that Beijing would host the 2008
Olympic Games marked China's emergence as a major global player. Just as
the 1964 Tokyo Olympics and the 1988 Seoul Olympics propelled Japan and
South Korea onto the global stage, the 2008 Beijing Olympic Games will
be China's "coming out" party—an event that showcases China's
maturation into a great economic and, to a lesser extent, political
power. As PRC Premier Wen Jiabao noted on April 24 this year, the
Beijing Olympics present an opportunity for China to show the world how
"democratic, open, civilized, friendly, and harmonious" it is.
Quick Glance
- After winning its 2001 bid to host the Olympic Games, China launched a massive seven-year effort to prepare for the event.
- The huge inflows of investment to support the Olympics and recreate Beijing have had an important ripple effect on economic growth.
- Though China has experienced some significant hardships this spring, the games will probably be even more important to the country than initially expected.
The 2008 Olympics will be among the most expansive ever held, with 16
days of competition from August 8 to 24 in 28 sports inside 37 arenas
for 302 gold medals. In addition to Beijing, six other cities will host
Olympic events—Hong Kong; Qingdao, Shandong; Qinhuangdao, Hebei;
Shanghai; Shenyang, Liaoning; and Tianjin—making the Olympics a
national event.
China has embraced the basic ideals of the Olympics with its own slogan,
"One World, One Dream," and has widely promoted a green and high-tech
Olympics. To prepare for the games, China invested nearly $40 billion in
infrastructure alone from 2002 to 2006, transformed the cityscape of
Beijing, made national stars out of PRC Olympic champions—such as
high hurdler Liu Xiang and platform diver Guo Jingjing—and created
a great sense of excitement and anticipation among the public.
Furthermore, the Olympics have had a significant influence on Beijing's
economic development, environment, and the growth of the country's
advertising, television, Internet, mobile phone, clean energy, and
sports sectors. Building on 30 years of economic reform and opening and
on the substantial economic impact of China's 2001 World Trade
Organization (WTO) entry, the excitement surrounding the games is
pulling many of these sectors onto the international cutting edge.
Building a new Beijing
After winning the bid to host the 2008 Olympics, China began a massive
seven-year effort to meet IOC's demanding conditions for the games.
Having researched earlier Olympic games, in particular the Sydney and
Atlanta games, the Beijing Organizing Committee for the Games of the
XXIX Olympiad (BOCOG) began the enormous task of creating an
infrastructure that could support such a massive sporting event. To
integrate the activities of key central government ministries, the
Beijing Municipal Government, and BOCOG, the PRC government created a
high-level working group directed by then-Executive Vice Premier Li
Lanqing and, since March 2008, by Xi Jinping, PRC vice president and
number six in the Politburo Standing Committee.
As Michael Payne, who served as IOC's top marketer for more than 20
years, wrote in Olympic Turnaround, China recognized that a critical
factor in creating a successful Olympics would be careful coordination
among IOC, BOCOG, and the host city. China studied the example of the
Atlanta games, where coordination between the operating committee and
the city government was poor, according to Payne. To ensure better
coordination, BOCOG was staffed primarily with Beijing Municipal
Government officials and General Administration of Sports experts, and
was led by Beijing Party Secretary Liu Qi and then-Mayor (now Vice
Premier) Wang Qishan.
The Beijing Olympics Action Plan, announced by BOCOG President Liu Qi in
March 2002, mandated not only sweeping plans to build stadiums and
facilities for the Olympics, but a makeover of Beijing itself. In
implementing the plan, Beijing made every effort to abide by
international tendering standards and to avoid favoritism. It also
imposed the template of IOC's global Olympic programs onto the Beijing
Olympic program. Some of the projects in which China has invested to
prepare for the games include the following:
Sports facilities
China planned (in some cases, with foreign architects) and built the
Olympic Park and the 37 stadiums and venues that will host Olympic
events. These include 32 buildings in Beijing—19 new and 13
refurbished—and venues in five other Chinese cities—a
sailing center in Qingdao and soccer stadiums in Tianjin, Qinhuangdao,
Shenyang, and Shanghai. China also constructed 59 training centers and
infrastructure projects for the Paralympic Games, to be held in Beijing
in September 2008 following the Olympics. Beijing's stadiums, in
particular the National Stadium (or "Bird's Nest"), are state of the art
and well designed, and they will be available for use long after the
games are over.
Transportation and infrastructure
According to Liu Zhi, deputy director of the Beijing Municipal
Development and Reform Commission, from 2002 through the beginning of
the games, Beijing will spend $1.1 billion on transportation
improvements, such as building and extending Beijing's subway system,
completing the city's light rail system, and constructing and
refurbishing more than 318 km of city streets—including 23 roads
in and around the Olympics sites, two new ring roads around the city,
and high-tech traffic control systems. The city has also built an
enormous new airport terminal at the Beijing Capital International
Airport and extended the toll road to the airport.
Urban renewal
According to Beijing's 11th Five-Year Plan (2006-10), Beijing will spend
more than $200 million to demolish dilapidated housing and urban
buildings; refurbish 25 historic areas, including many of the city's
landmarks, old streets, and beautiful, four-corner residences that date
from the imperial period; and restore Beijing's many historic places,
including the Forbidden City.
High technology
China's capital has budgeted $3.6 billion to transform Beijing into a
"digital" city by 2008, with widespread use of digital and broadband
telecommunications, wireless transmission and networking technologies,
and "intelligent technologies," including smart cards.
An Olympic lift
Beijing's hosting of the Olympic games has already had a knock-on
effect, spurring faster growth or change in several areas.
Tourism
The number of tourists in Beijing has risen rapidly, a result of the
increased visibility that the Olympics bring to the host country. Though
estimates of the number of people who will visit China during the
Olympics—or even the number of people who will visit China this
year—vary significantly, it is clear that the games are a magnet
for tourists. Chen Jian, president of the Beijing Olympic Economic
Research Association, estimated in the spring that Beijing will receive
roughly 600,000 foreign visitors and 2.5 million domestic Chinese
tourists during the Olympic games and that the number of foreign
tourists in Beijing will grow 8 to 9 percent annually in the decade
following the games because of the games themselves. (According to the
China National Tourism Administration, Beijing had 3.8 million foreign
visitor arrivals in 2007, up 11.8 percent over 2006, and China had 42.4
million foreign visitor arrivals last year, up 20.8 percent over 2006.)
The number of hotels in Beijing has also jumped in recent years. Since
China entered the WTO and won its Olympic bid, the country has reduced
hotel ownership restrictions. Starting in 2002, foreign investors could
own a majority stake in hotels, and in 2006, wholly foreign-owned hotels
were permitted. These moves cleared the way for an extensive expansion
of foreign-owned hotels and other tourism facilities.
Environmental improvements
Every Beijing resident is keenly aware of the city's environmental
challenges. Air quality, particularly in the summer, can be less than
optimal, with particulate matter at alarmingly high levels. Though
Beijing has taken steps to improve air quality, such as ordering
coal-burning power plants to reduce emissions, construction projects to
halt during the period around the Olympic games, and 200 heavily
polluting factories to move out of the city, air quality will remain a
worry for the athletes who participate in the games.
Under the Beijing Sustainable Development Plan, China launched 20
projects to improve the quality of Beijing's environment, with an
overall investment of $12.2 billion. The city has established new
wastewater treatment plants, solid-waste processing facilities, and
green belts and built a fleet of clean buses for the games. Beijing has
phased out ozone-depleting substances ahead of schedule, made use of
water- or air-source heat pump systems to save energy in Olympic
stadiums, replaced 47,000 old taxis and 7,000 diesel buses, and began
requiring vehicles to meet EU emissions standards. In addition, natural
gas (use of which is up tenfold), geothermal, and wind power are
gradually replacing coal. Much of Beijing is now covered by trees,
bushes, and lawns—a radical departure from the past—and
Beijing has set up 20 natural reserves to protect forests, wild plants,
animals, wetlands, and geological formations, according to the United
Nations Environmental Program's (UNEP) October 2007 report on Beijing's
environmental record. The 2008 Olympics will be one of the most
environmentally friendly ever, according to the UNEP report, despite
concerns about Beijing's air pollution.
Economic development
The huge inflows of investment to support the Olympics and recreate
Beijing have had an important ripple effect on economic growth, not
simply in Beijing but in areas surrounding the capital. The Beijing
Statistical Bureau estimates that spending on the Olympics has added 2.5
percent annually to Beijing's overall economic growth since 2002.
Furthermore, the recruitment of Beijing Olympic partners, sponsors,
suppliers, and many other companies that want to take advantage of the
Olympic "buzz" in Beijing has helped to boost advertising spending
sharply. Advertising spending in China, 42.5 percent of which is focused
on television, will likely rise from $14.7 billion in 2007 to roughly
$18.4 billion this year, and spending on Internet advertising may rise
by as much as 30 percent, according to an October 2007 ZenithOptimedia
World Advertising Expenditure Forecast.
Similarly, China's sports industry, immature in 2001, is growing
rapidly. The Hong Kong Trade Development Council (HKTDC) estimates that
China's sports industry, though tiny now, has a market potential of $250
billion. Per capita sports consumption in Europe and the United States,
according to HKTDC, is $300-$500 annually, but in China it is only about
$12. Driven by major international sporting events held in China, such
as the Beijing 2008 Olympic Games, the Fédération Internationale de
Football Association's (FIFA) Women's World Cup 2007, and the Guangzhou
Asian Games in 2010, China's sports industry will soon grow by 20
percent a year, particularly in Beijing, Guangdong, Liaoning, and
Zhejiang.
Not all is rosy
Though preparations for the Beijing Olympics have gone well, 2008 has
been a difficult year for China so far, tarnishing the games in some
instances and making the environment in which they will be held much
more challenging. The snow crisis in late winter, which revealed
weaknesses in China's infrastructure, especially in its electricity
grids; the torch relay protests that occurred outside of China; and the
massive earthquake in Sichuan and surrounding provinces have turned the
focus of the Chinese, and the world, away from the games. What was to be
a global celebration of China's achievements has now been tinged with
anger and tragedy. Heavily critical foreign media coverage of the game
preparations, including coverage of air pollution and tainted food, has
also removed some of the shine from the image of the games.
Foreign protests
Though the modern Olympic movement—symbolized by the Olympic
rings, torch relay, and cardinal Olympic principles of hope, dreams and
inspiration, joy in effort, friendship, and fair play—promotes the
idealistic and internationalist nature of the games, this spring's torch
relay became highly political. The relay, meant to symbolize China's
embrace of Olympic ideals, was marred by protests in Greece, Great
Britain, France, the United States, and elsewhere against China's
policies in Tibet and the Sudanese region of Darfur and China's human
rights and environmental policies in general.
Early this spring, harsh media coverage of China, a characterization of
PRC leaders as "goons and thugs" on a US news program, and threats by
major Western leaders to boycott the August 8 opening ceremonies sparked
dismay and anger in China—particularly among young people, who
generally admire the West most. Though Western nongovern-
chinabusinessreview.com July-August 2008 43 mental organizations and
protestors may have targeted PRC government policies, the Chinese public
perceived these protests as aimed at the country and its citizens. Few
Chinese supported the positions of the demonstrators, and most Chinese
were deeply offended by images of protestors disrupting the torch relay
and the celebration of the Beijing Olympics. Furthermore, the prospect
of demonstrations during the games has prompted the PRC government to
tighten the enforcement of visa application requirements and shorten the
duration of some visas, which could hurt foreign businesses in the short
term.
Earthquake response
The tragedy of China's May 12 earthquake and its aftershocks may have
altered both the way the Chinese view the Beijing Olympics and the way
foreigners perceive China. Compared to the Myanmar government's response
to the typhoon in Myanmar, or the US government's response to some
natural disasters in the United States, the PRC government's response
was swift, transparent, and to an unprecedented extent, driven by public
concern for the victims of the quake. The Internet and text messages
spread word of the quake within minutes, well before the government was
able to respond to it. In addition to government aid workers, nearly 1
million young Chinese volunteered within days to rush to Sichuan and
help with the rescue effort, and as many as 200,000 may have actually
gone. Domestic media prominently broadcast news of foreign earthquake
relief efforts, perhaps an attempt to soften the earlier harsh domestic
reactions against France and other countries where there were
demonstrations and protests against the torch relay. Western media
coverage has been more sympathetic to China since the earthquake hit.
Though the games may still evolve into China's coming-out party, they
will be tinged with sadness because of the devastation wrought by the
earthquake. At the same time, the earthquake has created a strong
feeling of community, particularly among average Chinese who sympathize
with the quake victims. The sense of unity and emotion will likely
infuse the Beijing Olympics and create a strong sense of national pride
and determination to succeed.
Lingering effects
Though the expected economic downturn following the Beijing Olympics in
August and the Paralympics in September will likely
occur—particularly in the advertising sector—it will be
minor and short-lived. China's economy is only beginning to feel the
positive impact of many projects associated with the Olympics. For
example, investment in the environment has been key to the games. It
will continue through 2015, as set in the Beijing Sustainable
Development Plan and perhaps beyond, given recent central government
attention to the environment. In addition, China's strong economic
growth overall will continue to support growth in Beijing itself, and
the city's devotion to infrastructure investment—especially in
information technology, banking, and the services sector—is
unlikely to wane. China's sports sector can only grow more rapidly, and
demand for exciting sporting events will surge. Following the Beijing
Olympics, the Shanghai 2010 Expo may drive economic and social change to
some extent.
The residual benefits of the games are even greater. A successful
Olympics will accelerate China's opening to foreign investment, foreign
ideas, and internationalization. Though it is difficult to measure human
rights and human freedom, China is unquestionably more open and
accessible than ever before in its history. By February 2008, 221
million Chinese had regular Internet access and a direct connection to
the rest of the world. Information travels at astonishing rates, and the
transparent manner in which the earthquake and the games were handled
will probably only accelerate this trend.
As long as the strong Western criticism of China this spring does not
recur, a successful Olympics will also boost the self-confidence of
Chinese citizens, particularly in rapidly developing areas along China's
coast. Like South Korean and Japanese companies after their home
countries hosted the Olympics, China's great companies—including
its Beijing 2008 partners and sponsors—will likely penetrate
foreign markets and establish a multinational presence in the next few
years. Lenovo Group Ltd., China's premier computer manufacturer, is the
first China-based multinational corporation to have joined the ranks of
IOC's global top sponsors. Fourteen other Chinese companies contributed
up to $60 million to become Beijing 2008 partners and sponsors. Greater
national self-confidence, and the sense of community generated by the
earthquake, will also make it more likely that China will tolerate, and
perhaps welcome, a broader range of ideas.
On the other hand, if Chinese believe that the Olympics "failed" or were
badly tarnished because of foreign actions—whether demonstrations
or media coverage—China's reaction will be sharply negative.
Chinese, particularly those born in 1980 or later, are intensely proud
of China's accomplishments but also intensely desirous of global
recognition. If that recognition is denied, or if the dominant
perception is that the West is happy to exploit China's resources but
unwilling to treat China as an equal, then sharp, negative reactions
will likely ensue. Reinforced by protectionist or aggressive actions on
the part of the United States or the European Union, China's reaction
may turn hostile—to the great detriment of the West and to the
Chinese people themselves. The earthquake, and the reaction to it, make
it much less likely that the Beijing Olympics will be anything other
than a positive, uplifting event—though perhaps in a different way
than expected.
Lee M. Sands
is managing director of Sierra Asia Partners in Beijing.
Copyright 2008 US-China Business Council
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