How Much Will Beijing Pay for the Olympics?
RIA Novosti economic commentator Vasily Zubkov, May 23
The Chinese authorities are sparing no expense for the 2008 Olympic Games. They are
eager to show the whole world China's impressive economic success, growing
prosperity, openness and love of peace.
The Chinese Olympics promises to be the most expensive sports event in human history.
In the past hundred years, the summer 2004 Olympics in Athens had the biggest price
tag - seven billion Euros. Preparations for it dealt a serious blow at the Greek
budget - it developed a 5.3% deficit, which exceeds by far the European Union's
admissible threshold. Judging by all, the 2008 Olympic Games in Beijing can break
Getting ready for the games, the Chinese carefully studied the Greek experience. The
Greeks got into financial problems largely because they did not include in the
budget a considerable part of expenditures on social needs and other indirect
Olympic requirements. In order to avoid this, the Chinese and Beijing budgets were
sensibly over-adjusted. But it is still unknown how much exactly the Chinese are
going to spend on the games.
In official estimates, in the 2002-2007 period investment in the Olympic
preparations should reach 141 billion Yuans (about $18 billion). But the closer the
games, the more doubts there are about China's ability to keep within the announced
budget. Quoting Beijing authorities some foreign sources report that China will have
to spend 63 billion Yuans ($8 billion) on the construction of new underground lines
and other transportation facilities, and another 40 billion Yuans ($5 billion) on
the building of satellite cities. The figure of 280 billion Yuans ($39 billion)
looks more authentic but it absorbs only indirect spending on Olympic preparations.
It does not cover the construction of sports facilities and development of a
security system. Nor does it include the 67 billion Yuans ($8.5 billion) that the
port of Qingdao (Tsingtao - Western postal name) was going to spend on the
preparations for the Olympic regatta in the Yellow Sea.
Athens spent $2.4 billion on competitions, accommodation of athletes and guests and
other events that were directly linked with competitions. Let's compare it with
Chinese spending. Deputy Chairman of the Olympics-2008 Organizing Committee Wang Wei
said that in March 2007, China spent two billion dollars on the project, half of
which came from the International Olympic Committee. Preliminary estimates show that
Beijing will spend on the Olympics many times more than Athens did.
At the same time, the money spent is already bringing benefits to China. Lavish
Olympic injections have given a powerful impetus to the construction of housing and
transport facilities; additional government contracts have encouraged the
development of domestic high tech companies working in electronic instrument-making
and machine-building. Beijing's economy has been streamlined; the share of services
has shot up, and the environmental situation in the Chinese capital has improved. In
official figures, the Beijing economy owes a 2.07% addition to the annual growth
rates to the Olympic projects. The programs already implemented are bringing more
than one billion dollars a year to the municipal budget.
It is only natural that the state has funded the bulk of indirect Olympic spending,
but private investors have also made a contribution. Some companies are sponsoring
the Olympics, for example General Electric and Eastman Kodak. Others have invested
in sports hoping for future dividends. Thus, the American Golden State Holding is
building the main Olympic stadium in Beijing and simultaneously working on an
electric power station and a water duct in one of the city's districts. A company
set up with the participation of local residents is building an all-purpose sports
palace Wukesong (Five Pine Trees) in the west of Beijing. It will host a basketball
tournament. After 2008 this centre will become private. Other Olympic facilities
will also be used for trade and entertainment. For example, the Olympic water sports
centre - the Water Cube - will become Beijing's biggest water leisure facility. The
two thousand flats built for athletes will be sold.
It is striking that the thrifty Chinese are spending money on such an unusual scale.
Their Olympic budget extends to projects in cities that will not host the Olympics.
The steppe-located city of Hohhot will get a new airport worth $70 million and a
fast highway linking it with Beijing. This is done to back up the capital airport in
case of heavy rains during the games.
The Beijing Organizing Committee rejected my apprehensions about huge spending and
an ability to recoup it. A high-ranking Chinese official said: "The main goal of the
Olympic investment is to create an infrastructure that will serve the people of
Beijing after 2008 as well. We will make the Olympic budget profitable. We are doing
all we can for our games to be one of the best and they will bring us money."
The Chinese have already started making money. A year before the games, Chinese
shops abound in Olympic souvenirs and goods with Olympic symbols. There are bright
ads of the future games all around, even at the bottom of the Great Chinese Wall.
The 2008 Olympic symbols have already reached Moscow. Considering the profits that
the Olympic Organizing Committee will make from selling the rights to television
broadcasting of competitions, sponsor incomes, and money from ticket sales (worth
almost one billion dollars), it is easy to believe that the Olympic Games in Beijing
will not bring financial losses.
The opinions expressed in this article are the author's and do not necessarily
represent those of RIA Novosti. -0-