Chinese economy: where will it go post-Olympics?August 30th, 2008 - 9:23 am ICT by IANS
Beijing, Aug 30 (Xinhua) As the 2008 Beijing Olympics ended in a splendour of fireworks, concerns over a post-Games downturn for the Chinese economy re-emerged.History shows that some host countries - Japan and South Korea, for example - had experienced post-Olympic declines in investment.
Japan witnessed a drastic fall in growth the year after the 1964 Games, down to 5.2 percent from the previous year’s 13.1 percent. South Korea saw the rate slip from 10.6 percent to 6.7 percent in 1989.
Will the Chinese economy follow the same pattern?
Beijing city’s gross domestic product (GDP) was expected to register an average annual growth of 11.8 percent between 2005 and 2008, when the city was investing for the Games, said Chen Jian, the Beijing Olympic Economy Research Association deputy head.
The expected growth was 0.8 percentage points higher than the average rate for the five-year period from 2001 to 2005.
Chen said investment for the Games had driven the city’s growth by the biggest margin in 2007 - 1.14 percent.
Official statistics showed organisers had spent 13 billion yuan ($1.90 billion) on construction of venues and another 280 billion yuan on urban infrastructure, such as transport and environment.
About 1.5 million new job opportunities were created between 2005 and 2008 along with the investment.
Other host cities, including neighbouring Tianjin and Qingdao, also reported higher growth as they geared up for the Games. The sailing events in Qingdao helped in boosting regional economic growth by 0.8 percent annually.
The positive impact of hosting the Games was there, but its leverage among the huge national economy was limited.
Beijing’s gross domestic product (GDP) accounted for less than four percent of the country’s total, and Olympic-related factors were not major forces behind the growth in host cities to make a difference after the Games.
The annual investment of Beijing for the Olympics took up only one percent of the country’s total between 2002 and 2007, according to statistics.
About 718,300 square meters of Games-related construction was completed in 2007, 0.0139 percent of the total.
Zhang Xiaode, a China National School of Administration professor, depicted the situation vividly.
“If the Chinese economy is measured at a scale equal to the sea, the impact of a frog jumping into the sea can almost be ignored.”
A JPMorgan Chase report said the Chinese economy was not likely to slow in the post-Games period arguing that host countries of large economies that enjoyed fast growth are not vulnerable to such impact.
Justin Yifu Lin, the chief economist and vice president of the World Bank, had long held China would face no post-Olympic recession. The size of the economy dwarfed the investment on building venues and infrastructure for the 2008 Beijing Olympics, he said in May.
The country had plenty of investment prospects as it was to host the World Expo in Shanghai and the Asian Games in Guangzhou in 2010, among other international events.
President Hu Jintao also openly endorsed the view in a joint interview with overseas journalists a week ahead of the Games.
“Preparations for the Games have undoubtedly boosted Beijing’s economic and social development. However, the city’s GDP accounts for a tiny part of China’s total, so people should not overestimate the impact.”
However, economists were still concerned of the “post-Games effect”, because investment would inevitably drop and consumption that had come along with domestic and overseas tourists would decrease or even come to zero after the Games.
The impact could combine with other uncertainties such as the global slowdown and slack export demands to complicate the prospects of the economy.