Olympic spending unlikely to be a drag on China
Analysts note that Beijing represents a tiny slice of the economy. How the country reacts to protests, however, could affect foreign investment.
SHANGHAI — The annals of Olympic venues are rife with financial horror stories. All but one of the last 11 host nations had an economic hangover of sorts after the Summer Games ended, according to investment bank Morgan Stanley.
Most Chinese and Western analysts say China, the world's fourth-largest economy and a key driver of global growth today, will not meet the same fate. Despite having spent a record $43 billion to prepare for the Games that start Friday, Beijing accounts for only a speck of the country's economy and population. In that sense, experts liken the Olympics' probable effect on China to Atlanta's on the United States after the 1996 Games, where there was no economic fallout.
That depends on whether the Beijing Olympics are successful, many economists say, and on this measure there is one big point of difference from Atlanta and most other host cities. Success won't be gauged by just how well organized the events are or whether there's little doping among athletes. Rather, in the view of some analysts, it's what will happen in terms of protests and, most significantly, Beijing's response to them.
"We are very concerned about how the [Chinese] authorities will handle the protests that will inevitably take place," said Andy Rothman, a China economist for CLSA Asia-Pacific Markets in Shanghai.
Mishandling of demonstrations would tarnish China's image and carry broad economic repercussions, including more difficulties for China's sovereign wealth fund in investing overseas and the potential for Western consumers to boycott Chinese goods. Protests have been a part of the Olympics since the first modern-day version took place in Athens in 1896. But criticisms of China's authoritarian government, its human rights record and intolerance of dissent have set this year's demonstrations apart. During the Olympics, Beijing has designated three public parks as "protest zones" for people to vent their grievances, although they will have to get permission in advance from the government.
"I don't remember any other [host cities] having such areas of protests," said Karl Lennartz, an Olympic historian from Cologne, Germany, who arrived in Beijing this week. "I'm not sure it's a good idea."
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