SCMP Tuesday, August 21, 2001

West fears being sidelined as Beijing goes for gold


China may have won the right to host the 2008 Olympics but it is now facing another tough contest - ensuring that in the public's eyes it was all for a good cause. For many mainlanders, the choice of China is a source of national pride. And there is little doubt that China's US$1 trillion economy is muscular enough to lift the Olympic weight.
But there are ever-so-slight rumblings of discontent, and China's communist leaders will have to deflect criticism that the Games and related investments in Beijing may pinch other development projects, particularly those in the economically lagging interior.
China has trumpeted its "Go West" programme, a long-term strategy to channel investment into the hinterland and narrow the economic gap between the interior and the fast-growing eastern coast. The Communist Party wants to ensure social stability by raising incomes in the west, home to about 300 million people and 90 per cent of those below the absolute poverty line.
But the Games will mean that over the next seven years about 180 billion yuan (about HK$169 billion) will be spent in the nation's capital.
"Beijing won't be able to come up with that money itself and it will have to rely on the central Government," says Song Guoqing, chief economist at the China Stock Exchange Executive Council. "Much depends on how the money is raised."
That was echoed by Pan Yingli, an economist and professor at Shanghai's East China Normal University. "I hope they use market mechanisms to raise funds for the Olympics," she says. "The central Government should not be too heavily involved. This should largely be the burden of the Beijing city government - otherwise the western regions will be unhappy."
Beijing will be spending on numerous sites for athletic events, including an 80,000-seat stadium and an Olympic village to accommodate the contestants and officials. After the Games, it will try to sell off the village as residential housing, though a similar plan proved difficult to accomplish after it hosted the Asian Games in 1990.
Beijing will also make major extensions to its roads and subway system as well as improve its telecommunications and the environment. Large chunks of its inner-city industry will have to be relocated.
The Olympic organisers will have the benefit of plenty of corporate sponsors who are already queueing up, hoping to use the Games as a springboard for their domestic marketing drive. Other companies are hoping that a little bit of timely support for the Games will pay off as official favours later on.
Economists say that ultimately, the central Government will not be strained by the financial burden of holding the Games. "We expect China's economy to be about US$2 trillion by 2008," says Andy Xie of Morgan Stanley Dean Witter in Hong Kong. "Spread out over seven years, US$20 billion is not that much. And much of that is for needed infrastructure anyway."
Other economists shared that view.
"I don't think there's too much to worry about. The annual spending is only about one per cent of our fixed asset investment total," says Cheng Xiusheng of the State Council's Development Research Centre.
But how will this spending be perceived outside the capital? "We still haven't seen the details," says Chen Demin, an economist and vice-president of Chongqing University. "This spending should stimulate the economy but it could create some competition for funds."
Others are less charitable.
"Beijing is using the whole country's money," says Dai Qing, a prominent dissident and writer on environmental issues. "The regime makes its mind up and does what it wants. Others who disagree have no say in this matter. There is no outlet for opposition because the state controls the media so tightly."
Local journalists say Beijing's official media will continue to run stories describing broad support for the Games from around the country. And in the months and years ahead, the media will highlight the benefits of the Games to other parts of the country.
Officials are already talking up the economic gains from the Olympics. "This is not just for Beijing," says Ye Zhen, spokesman of the State Statistical Bureau. "This will provide an opportunity to develop the economy of the whole country. Other provinces and cities will have opportunities too."
Materials used in construction as well as sports equipment, packaged food and souvenirs will be bought from areas outside of Beijing, officials say. Tourists who flock to the capital for the Games may also visit other cities on the mainland.
Officials of the bureau insist that the Games will add an average of 0.3 to 0.5 of a percentage point to gross domestic product annually through 2008.
Nonetheless, there are small signs that there is still some unease over the intended use of funds. Some people question whether the money wouldn't be better spent on improving medical care or education in poorer corners of the country.
Even well-to-do areas of the country are showing signs of disapproval. In Shanghai, online chat rooms and private e-mails have taken up the theme that the mainland's commercial centre will be stuck paying the bills while Beijing gets a chance to show off on a global stage. "It's not the people of Beijing who will be paying for this," states one angry e-mail making the rounds in Shanghai.
In Beijing, municipal officials have felt obliged to state publicly that they will not seek contributions from the comrade in the street.
The need for public reassurance is due to Beijing's somewhat blemished track record. The city government leaned on local residents to help finance the Asian Games, insisting that companies and government departments contribute "voluntarily".
Some economists note that the western areas have to work harder on attracting private capital by creating a better investment climate. Excessive red tape and local government interference are partly to blame for the lack of investment capital in the hinterland.
"Private investors will look to the places that offer better returns," says Ms Pan.
Even some of the big companies of the west often see more opportunity in the coastal areas. In July, one of the western region's biggest firms, Yunnan Hongta Tobacco Group, announced an investment of 800 million yuan in a luxury hotel - in Shanghai.
Economists say the western development programme is a long-term strategy and over that period other parts of the country will have substantial development needs and will claim some of the funds in central government coffers.
William Kazer ( ) is a member of the Post's Shanghai bureau.