The Olympics: An Economic Double Edged Sword?
What does hosting the Olympics mean for China’s economy?
Spending $43 billion on large-scale infrastructure projects like hotels, public transportation and sports arenas certainly creates jobs and economic activity. It also will help draw tourists. But hosting the Olympics doesn't always result in long-term financial gain.
Before China, Greece held the title for the biggest Olympic spender at roughly $12 billion U.S. After the 2004 Athens Games, Greece’s budget deficit hit 5.3 percent, or 50,000 Euros per household. Citizens unable to afford tickets to the ceremonies essentially ended up financing the games through higher taxes.
While Australia’s government claimed that the 2000 Sydney Olympics would not be a drain on taxpayers, four years later the state was still paying to maintain underutilized stadiums and facilities built especially for the 2000 Games to the tune of about $40 million U.S. a year. The government does not expect to break even on the Games until 2010.
Of course, hosting the Summer Games hasn't always been an economic drain. In 1988, South Korea’s economy grew by 10 percent and the 1996 Atlanta Games added a 2.5 percent boost to the U.S. economy. The 1992 Summer Games in Barcelona coined the phrase the Barcelona effect, which referred to the ability of Spain to reap increased tourism and tourist dollars after hosting the Summer Games.
So how will China fare? Wang Yiming, an expert with the think tank under the National Development and Reform Commission, says the Games "will not become a watershed of China's economic development, as the fundamental factors that have supported China's economic progress in the past 30 years are not to change markedly."
Another website pointed out that "heavy-handed security and restrictions on business visas led many buyers and inspectors to cancel visits and orders," and that empty hotel rooms and a decline in airline reservations don't bode well. Then again, Beijing's entire economy accounts for less than 5 percent of China's GDP.
It's too early to gauge the ultimate financial impact of these Games. But considering the economic juggernaut that China is today, maybe the more relevant question for China is, Does it really matter?
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"the age of post-Olympic discovery"
Huffington Post Blogger Chi Tung takes a look at how Chinese officials are desperate to keep the sports metaphors alive post-Olympics.
The Olympic Glow Gives Way to Economic Worries
Check out this article from US-China Today discussing China's economic Olympic hopes vs. reality.
The article also discusses what China and the US must do to restructure their economies given the current economic climate. One must learn to spend — the other must learn to save. The article is worth a quick read.
The Olympics, besides
The Olympics, besides spending billions that could have been devoted to infrastructure improvements and creating economic opportunities for poorer provinces, also caused the eviction of hundreds of thousands of people. According to the Center on Housing Rights and Evictions, 1.25 million people were evicted from their homes in the eight years of Beijing's urban transformation to accommodate the Olympics and related development. Many people who applied to protest in designated "protest zones" were intimidated or detained. Lawyers, such as Zheng Enchong, who have legally represented displaced residents of China's cities, are often harassed and face career-related repercussions.
Shanghai is also about to host a mega-event. Behind the world cup and the Olympics, the world expo is one of the world's biggest events. The 2010 world expo will displace approximately 50,000 people. If you include related urban development, such as the expansion of Shanghai's metro system, the Expo will displace more than 400,000 people. This number also excludes many migrant workers who are excluded from official estimates.
So what do we say to this huge number of evictees? We can't just tell them to go home. Homeowners associations are usually disorganized or government-controlled. It's nearly impossible to find a willing and affordable lawyer to take their case to court. Efforts to protest or demonstrate are met with harsh punishments. These people have little choice but to accept (usually insufficient) cash compensation or a replacement home in a distant suburb, far from friends and work. This represents the human cost in undertaking these massive events. Atlanta evicted people for the Olympics, but not nearly on the scale of Beijing or Shanghai. I hope that the Olympics and the Expo will significantly improve China's international status, because if they do not, more than 1 and a half million people will have lost their homes in vain.
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