Economy won’t be hurt after Olympics

Parliament

China will not suffer from a “post-Olympic recession”, senior officials said Sunday, because of the scale and potential of its economy.

“The Olympic Games won’t be a watershed for China’s economic growth,” Wang Yiming, vice-president of the Academy of Macroeconomic Research, said. The academy is affiliated to the National Development and Reform Commission, the country’s top planning body. “The fundamentals propelling the country’s economic development over the past 30 years will remain” even after the Games, he said.

The country’s economy grew 11.9% last year. But after the growth slowed to 10.1% in the second half of this year, it raised concern that the economy could suffer after the Games, which in some ways has acted as booster. The direct impact of the Games has been limited because of the size of country’s economy, Wang said.

China won the right in 2001 to host the 17-day event, and its economy has grown at an average rate of 10.5% since. A number of factors, such as the nation’s entry into the WTO and the Olympic-related investment boom, have boosted the economy and made it the world’s fastest growing. To prepare for the Games, Beijing spent about 13 billion yuan ($1.89 billion) to build sports facilities and 280 billion yuan ($40.75 billion) to improve urban infrastructure.

Such investments helped Beijing’s economy grow an estimated 10% faster in the past seven years, said Yang Kaizhong, president of Beijing Economic and Social Development Research Institute. But the 293-billion-yuan bill, hefty as it is, only accounted for 0.55% to 1.06% of China’s fixed asset investment between 2005 and 2008, the peak time for Olympic-related investments, Wang said. And Beijing, the main recipient of Olympics-related investment, only accounts for 3.6% of the country’s gross domestic product.

Officials say China will continue its substantial investment in infrastructure even after the Games and that would help sustain the economy’s growth momentum. Beijing has plans to add six more lines covering more than 360 km to its tube network by 2015 to ease traffic congestion and improve connectivity to its suburbs. The investment will be more than what the city put in to build 149 km of subway in run-up to the Games. Other mega-events, such as the 2010 Shanghai World Expo and the 16th Asian Games to be held in Guangzhou the same year, are also likely to boost the economy, Wang said.

Earlier, the central government said it would strive to maintain a stable and fast economic growth while curbing inflation. The country, especially its exports sector, has already felt the pinch of a falling growth rate and rising costs of labor and raw materials. More than 67,000 small- and medium-sized enterprises have reportedly had to shut down in the first half. “Growth is likely to slow after the Olympics” but not because the Games would be over, Wang Tao, an economist with UBS Securities, said. (China Daily)

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