Beijing's Post-Olympic Blues

By Zhang Xiangdong
Published: 2008-10-15
From Nation page 15 issue 389 October 13 2008
Translated by Zuo Maohong
Original article:

Amidst aspirations that Beijing would become an international center after the Olympics, the capital's economy hit a seven-year low after hosting the Games.

As athletes went toe to toe in August, Beijing's industry value-added was down by 9.1%, and its infrastructure and public utilities sector, including iron and steel, petro-chemical and cement industries, lost tens of billions yuan, said an official from the Beijing Municipal Bureau of Industrial Development (BMBID).

Market observers projected that an economic slip was inevitable in the short term, and that Beijing's gross domestic product (GDP) growth rate this year might drop by two to three percentage points.

As the post-Olympic drag and global financial woes cast a long shadow over China's years of impressive double-digit growth, the EO learned that a 500-billion-yuan economic stimulus package proposal had been submitted to the Beijing municipal government for consideration.

The Cost of the Olympics
"Beijing has made considerable sacrifices in economic growth to ensure a successful Olympics," said the BMBID's Liao Guoping, who heads a division promoting infrastructure and public utilities.

According to Liao, of the 28 cement factories in Beijing, 27 were shut down during the Olympics. The only one left open was Beijing Cement Factory, which survived because it was also the city's biggest solid waste treatment company.

However, it was also asked to stop one of its production lines the day before the Games' opening ceremony to ensure good air quality.

Nearly all factories reduced production during the Games, said Liao, who also said that Shougang Group, the state's leading iron and steel producer, had already cut its production by four million tons before the Olympics. In addition, two chemical plants on the outskirts of Beijing halted production by late-July.

Statistics from the BMBID showed that in August, industrial value-added for the chemical manufacturing sector dropped by 25.3%; for the iron and steel industry was down by 51.7%; and for the cement and construction matarial sector was down by 45.3%.

Moreover, by the end of August, this year's investment in industrial fixed assets in Beijing was less than half of the same period last year.

"After all, the Olympics was a rare event in a hundred year, and it was a great opportunity. It's worthwhile to sacrifice some short-term interests," said Liao.

According to Chen Jian, executive chairman of the Beijing Olympic Economy Research Association (BOERA), such sacrifice was not just confined to Beijing. He believed the Games had heavily impacted neighboring economies including provinces like Hebei and Shandong.

Part of the industrial losses Beijing had experienced would not be revitalized. As planned, the city's future industrial development focus would shift to four industries - information, machinery equipment manufacturing, automobile, and biological and pharmaceutical production.

According to the State Council's blueprint, Beijing should give priority to high-end technological industries while maintaining moderate development in the manufacturing sector.

In other words, traditional industries would gradually phase out from the capital, and the Olympic period was a starting point for such transition.

Stimulating the Economy
According to research by the Beijing Statistics Bureau, the city had made direct investment of 134.858 bilion yuan in the Olympics, mainly in seven types of industries including electricity, water heating, transportation, information delivery, tourism, accommodation, and food and beverage services.

Now with the Games concluded, investment was unwinding. In the first eight months of this year, Beijing's investment growth in fixed assets was down by 1.2% compared to the same period last year, while that in infrastructure stumbled by 25.8%.

A slower yearly investment and a weaker economy would be inevitable, said Chen Jian.

Through hailed as a successful Olympics, Beijing hoped to transform itself into a metropolis comparable to the likes of New York and Tokyo.

However, the currently unfolding global economic woes have added uncertainty to such post-Olympics goals.

Previously, the Beijing municipal government had entrusted the State Information Center (SIC) to draft an economic stimulus plan to ensure economic growth in the coming two years, which the SIC defined as a declining period of the global economic cycle.

The SIC's proposed formula, which involved about 500 billion yuan, would cover investment in the reconstruction of the city's southern region, the development of three satellite suburbs - Yizhuang, Tongzhou and Shunyi, and the expansion of subway and rail transports. It would also provide support to high-end industries and real estate development.

"Such a package would stimulate the economy and extend the positive effects of the Olympics," said a source at the SIC.

The EO learned that the Beijing municipal government, upon receiving the proposal, had held several meetings between late September and early October to ensure stable fixed assets investment.

Since the beginning of the year, Beijing had approved 28 major projects with a total investment volume of 30 billion yuan. These projects were required to be launched as soon as possible after the Olympics.