By Dan Steinbock
After a decade of huge international events, many Chinese people suffer from ‘gala-fatigue.’ So has the case for Beijing Winter Olympics 2022 dimmed as well? Not necessarily.
When the International Olympic Committee (IOC) awarded the 2022 Winter Games to Beijing, in a joint bid with the city of Zhangjiakou in North China’s Hebei province, the initial reaction of the international community was lukewarm.
In the past 120 years, the costs of the Olympic Games have skyrocketed.
Olympic cost overruns
While cost overruns – the differences between initial projections and final costs – have been the rule since the 1960s, the best-known Olympic debacles occurred a decade later. In Montreal’s 1976 Summer Games, costs overruns proved so huge that the Canadian city almost went bankrupt and spent three decades to pay off the bill.
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Over the past two decades, the cost overruns of hosting the Olympic Games have skyrocketed from a minimum of 35 percent (Beijing 2008) to over 1,260 percent (Sarajevo 1984). While Barcelona 1992 ($9.7 billion) and Athens 2004 ($3 billion) contributed to debt crises in both countries, London 2012 ($15 billion) boosted UK’s economic distress before the Brexit referendum and Sochi 2014 ($22 billion) added to Russia’s economic challenges amid the US-EU sanctions.
The last nail in the coffin was Brazil 2016, where costs soared to $10 billion amid economic, political and security challenges.
Thinking big is no longer the Olympic goal. Rather, the point is to think smart. Typically, South Korea’s 2018 Winter Games will take place in a small mountain town, Pyeongchang; the smallest to host the Olympics since Lillehammer 1994 in Norway.
If Olympic cost overruns are a rule, how can the Beijing 2022 Winter Olympics be a success?
New preconditions for Olympic success
Cost control is the first precondition. Unlike most hosts, China has a track record. In the case of summer games, only few hosts – most impressively Beijing in 2008 – have managed to keep the cost overrun reasonable. But Winter Games aim far higher. While Beijing’s Summer Games cost $44 billion, the official 2022 budget is barely $3.1 billion.
The second precondition involves damage control. In 2014, the IOC introduced the Olympic Agenda 2020, which promotes sustainability and cost control seeking to transform Olympics into a “plug-and-play” event with minimal economic and environmental damage. For instance, Beijing 2022 is adapting six venues that hosted the 2008 Olympic Games to minimize the cost of construction.
Third, sustainability must be pervasive. Typically, the six new competition venues will be built using renewable technologies with energy saving and environmentally-friendly materials, while electricity for lighting, venue operations and transportation will come from solar and wind power.
Fourth, to promote sports economy, China needs world-class athletes as well as ordinary people. So the mainland is rolling out a national campaign to encourage 300 million people to participate in winter sports by 2022. Moreover, the venues will be distributed in three zones which will maximize opportunities for post-Games use, fostering the development of winter sports in and around Beijing.
Finally, local tourism needs sustained investment. While the current investment focuses for the 2022 Olympics, life will continue after the games. To avoid waste of resources, local governments and property developers could consider a sustained focus on local tourism and infrastructure, accommodations and environmental protection.
New China, new Olympics
While the first Olympics took place in 1896, the first Olympics in an emerging economy took place in Mexico City only in 1968. In Winter Olympics, the torch is shifting from advanced to emerging economies, as evinced by Russia 2014, South Korea 2018 and China 2022. That reflects the shift of economic power from the West to emerging Asia.
Gala-fatigue is difficult to avoid in an increasingly international mega city like Beijing. However, much of the cost controversy could be avoided if the Olympics can be organized with cost consciousness, damage control, sustainability, promotion of sports economy and sustained tourism and infrastructure investment.
Since Beijing Summer Olympics were China’s “coming-out party,” skeptics say there is no reason for new Olympics. Yet, several advanced economies have hosted two or more Olympic Games. Moreover, by 2022 China may be ready for a second coming-out party.
In 2008, Chinese GDP per capita was less than $7,900 and China accounted for 31 percent of the US economy and 7 percent of global economy, respectively. That was China of elevated growth but low living standards, cheap prices but high investment and overcapacity.
In 2022, Chinese living standards could be more than 2.5 times higher, while China may account for more than 80 percent of the US economy and some 20 percent of the global economy, respectively. That means a China with steadier growth but higher living standards, greater innovation and consumption will host the 2022 Winter Games. It will also mean China’s second coming-out party.
About the Author:
Dan Steinbock is research director of international business at the India China and America Institute (US) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). See http://www.differencegroup.net/
The original, slightly shorter commentary was released by China Daily on February 15, 2017