Motive behind Beijing Olympics

(Published in Banking Services Chronicle August 2008)

Beijing will host the 2008 Summer Olympics, officially known as the Games of the XXIX Olympiad, from Aug 8 to 24. In preparation for this for the past few years all roads have led to Beijing. China has incurred massive expenditure to showcase the events that have an Athenian pedigree. Its demand for steel revitalized a dying sector and may have helped LN Mittal soar among the richest.

Is this a waste of wealth or an investment? According to S&P Ratings Services, “Despite being the costliest games ever, Beijing Olympics won’t be a financial millstone.” The Games will only leave the Chinese capital with a developed infrastructure. Look at the major expansion in the subway system of Beijing, for example. Currently, there are four lines and 64 stations. As a preparation for the Olympics, an additional seven lines and more than 80 new stations are being constructed, including a direct link to Beijing Capital International Airport.

The Olympics are expected to give a boost to the economy in various ways. They are expected to add two million jobs. The Gross Domestic Product (GDP) growth of China is likely to go up by 0.3 per cent merely on account of the Olympics. If the homework for the Games has resulted in an uplift of China’s infrastructure, the actual hosting of the events will be a shot in the arm for its tourism sector.

All that sounds good. But are the economic benefits commensurate with the expenditure incurred? Probably not. The real motive of the investment seems to be above mere number-crunching. It’s RECOGNITION. It’s a common experience that in the first phase countries, like people, strive to be wealthy. In the second the focus shifts on being recognized.

This quest for recognition has been accepted by Chinese authorities. It was made clear by the vice-premier Li Lanqing in 2001: “The winning of the 2008 Olympic bid is an example of the international recognition of China’s social stability, economic progress and the healthy life of the Chinese people.”

Recognition is a must for a country with a dismal human rights record like China. Will the Beijing Olympics achieve this purpose? At least the torch relay does not seem to suggest so.