Economic Impacts of Beijing Olympic Essay

Economic Impacts of Beijing Olympic Bird Nest and Water Cube: We can all recall the opening of Beijing Olympic in Bird Nest where the gorgeous fireworks and fantastic shows were shown. As well as the Water Cube, an exquisite designed water stadium, which all the water competitions were hosted. After the 2008 Beijing Olympic, those multibillions infrastructures were put into use only a few times and for most of the time, they were empty. Some people believe the construction of those infrastructures was a one-time deal and will never meet the return.

Some people believe that there is a bigger picture in building the Bird Nest and Water Cube and the return for the Beijing Olympic is a lot more time what China put in for the 2008 Olympic game. What exactly are the impacts of the Beijing Olympic game? Cost of hosting Beijing Olympic: To understand what are the impacts on the Beijing Olympic game, we must first understand how much Chinese government put in for hosting the game. When China first bid on hosting the game, the estimated cost will be $2 billion.

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However, this number is only for the renovation and the construction of 74 stadiums for the event as a direct cost. According to Brad R. Humphreys in his article “Ring of Gold” the actually total cost for hosting the entire Olympic game including the non-sport infrastructures cost is about $41 billion. Compare with $16 billion that Greece spent, hosting the Beijing Olympic game spent 2. 5 times more than Greece did. Where did China spend those extra $25 billion? According to my research, $26 billion were spent on transportation, $10 billion were spent on energy, $2. billion were spent on improving urban environment, $2. 4 billion were spent on water resource. Beijing spent most of the money on transportation, which in Beijing the traffic was a nightmare. To improve the efficiency and avoid bad traffic for transportation before and after the Olympic game, Beijing refurbished 200 miles road and added 90 extra miles of subway and light rail. Is the total of $41 billion a cost or a benefit to China’s overall economic? Positive Economic Impacts:

After the Beijing Olympic game in 2008, many people raise the questions of whether spending $41 billion in hosting the game bring benefits to China’s economic or not. According to the nature of economic, the economic impacts of the Olympic game are hard to measure and has became a major debating topic for many economic scholars. However, one thing that we are sure off is that the Olympic game did tie on to many economic measures such as, employment rate, economic growth rate, inflation rate and tourism growth rate.

Also, as we know from the economic standpoint, fiscal and monetary policies are inevitable measures in hosting mega event like the Beijing Olympic game. A pre economic study by two Chinese economists Zhang Yaxiong and Zhao Kun addressed that the Olympic game has brought many Olympic related investments and consumptions to Beijing, surrounding cities and the entire country. According to their models, the estimated growth rate of Beijing prior the Olympic game from 2002 to 2007 has increased 2. 02%, the surrounding areas growth rate raise 0. 3% and overall an 0. 09% increase for the entire country. We can tell from these numbers that the impacts of pre Beijing Olympic game are not significant in the measure of positive impacts for the China’s economic over the duration of 5 years. Lets take a look at the economic impact of Beijing Olympic game after the event. According to the article of “Olympics Help Fuel Beijing’s economics growth” from the China Daily news paper written in January 2009, the Beijing’s GDP has a total of $153 billion and has increase 9% since 2007. 3. 2% of the Beijing’s GDP was contributed from the service sector and the spoke person from the Bureau of Statistics addressed that hosting the Beijing Olympic game was a major leap from manufacturing country into a service provider and the Games’ effect would continue to benefit Beijing’s economy in the up coming years. In the end, the spoke person YU Xiuqin concluded “Beijing maintained considerably fast economic growth last year despite the impact of the global financial crisis and several natural disasters at home. In this case, compare with pre Olympic game we can see the number has a dramatic change after the event and Beijing’s GDP did indeed growth by a large number. However, the major increase of growth rate only applies to Beijing, and 73. 2% of GDP are from service sector is not a dramatic changes since Beijing is mainly a service city anyway. Spending, $41 billion to host the Beijing Olympic game at this point seems like only benefiting Beijing over all. Negative Economic Impacts:

Negative economic impacts are not easy to measure since there are a lot of direct and indirect causes for having negative impacts. However, we can derivate negative economic impacts from opportunity cost in hosting the Beijing Olympic game. According to Michael Wines, a New York Times writer who wrote on the article of “After Summer Olympics, Empty Shells in Beijing”, the Bird Nest and the Water Cube that were constructed to host the event are sitting empty most of the time and only earning a small entrance fee for going in the souvenir shops.

Consider the money that the Chinese government spent on building those structures could put into use for building new houses, schools and hospitals, is the opportunity cost worth of the investment? From the economic standpoint, China’s economic is currently in an overheating situation, where inflation and overinvestment are the two major issues. Many economists believe that hosting the Olympic game has put upward pressure into the price of raw material and labor for China and which is not good in the current inflation situation.

Also people are arguing the over cost in constructing the Bird Nest and the Water Cube is due to the reason that the raw material and labor were not use properly. People might argue that the Olympic game might bring tourism to a peek after the Olympic game, which might be a positive impact on the economic. However, the number indicated that the current level of tourism in Beijing is around 1. 6 billion and can hardly increase due to the limitation on capacity of the hotels.

The hotel capacity was built to handle the crowd from the Olympic game, and after the Olympic game, most of the space are just sitting empty. As a matter of fact, the Beijing Olympics game was just a one-time boost of the Beijing economic. Overall, we can hardly conclude that whether hosting the Beijing Olympic game has positive or negative impacts on the economic due to the reasons that economic is hard to measure and the effect of an mega event might take some time to digest. However, base on the number and the research we conduct, we can say that negative impacts are more obvious than positive impacts.

Reference Brad R. Humphreys, “Rings of Gold,” Foreign Policy, August 2008 Michael Wines, (2010). After Summer Olympics, Empty Shells in Beijing. The New York Times. Michael F. Martin, (2008). China’s Economy and the Beijing Olympics. CRS Report Xin Hua, (2009). Olympics help fuel Beijing’s economic growth. China Daily Zhang Yaxiong and Zhao Kun, “Impact of Beijing Olympic-related Investments on Regional Economic Growth of China: Interregional Input-Output Approach,” Asian Economic Journal, 2007, Vol. 21, No. 3, pp. 261-282.


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