How much will Beijing pay for the Olympics?

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MOSCOW. (RIA Novosti economic commentator Vasily Zubkov) - The Chinese authorities are sparing no expense for the 2008 Olympic Games.

They are eager to show the whole world China's impressive economic success, growing prosperity, openness and love of peace.

The Chinese Olympics promises to be the most expensive sports event in human history.

In the past hundred years, the summer 2004 Olympics in Athens had the biggest price tag - seven billion Euros. Preparations for it dealt a serious blow at the Greek budget - it developed a 5.3% deficit, which exceeds by far the European Union's admissible threshold. Judging by all, the 2008 Olympic Games in Beijing can break this record.

Getting ready for the games, the Chinese carefully studied the Greek experience. The Greeks got into financial problems largely because they did not include in the budget a considerable part of expenditures on social needs and other indirect Olympic requirements. In order to avoid this, the Chinese and Beijing budgets were sensibly over-adjusted. But it is still unknown how much exactly the Chinese are going to spend on the games.

In official estimates, in the 2002-2007 period investment in the Olympic preparations should reach 141 billion Yuans (about $18 billion). But the closer the games, the more doubts there are about China's ability to keep within the announced budget. Quoting Beijing authorities some foreign sources report that China will have to spend 63 billion Yuans ($8 billion) on the construction of new underground lines and other transportation facilities, and another 40 billion Yuans ($5 billion) on the building of satellite cities. The figure of 280 billion Yuans ($39 billion) looks more authentic but it absorbs only indirect spending on Olympic preparations. It does not cover the construction of sports facilities and development of a security system. Nor does it include the 67 billion Yuans ($8.5 billion) that the port of Qingdao (Tsingtao - Western postal name) was going to spend on the preparations for the Olympic regatta in the Yellow Sea.

Athens spent $2.4 billion on competitions, accommodation of athletes and guests and other events that were directly linked with competitions. Let's compare it with Chinese spending. Deputy Chairman of the Olympics-2008 Organizing Committee Wang Wei said that in March 2007, China spent two billion dollars on the project, half of which came from the International Olympic Committee. Preliminary estimates show that Beijing will spend on the Olympics many times more than Athens did.

At the same time, the money spent is already bringing benefits to China. Lavish Olympic injections have given a powerful impetus to the construction of housing and transport facilities; additional government contracts have encouraged the development of domestic high tech companies working in electronic instrument-making and machine-building. Beijing's economy has been streamlined; the share of services has shot up, and the environmental situation in the Chinese capital has improved. In official figures, the Beijing economy owes a 2.07% addition to the annual growth rates to the Olympic projects. The programs already implemented are bringing more than one billion dollars a year to the municipal budget.

It is only natural that the state has funded the bulk of indirect Olympic spending, but private investors have also made a contribution. Some companies are sponsoring the Olympics, for example General Electric and Eastman Kodak. Others have invested in sports hoping for future dividends. Thus, the American Golden State Holding is building the main Olympic stadium in Beijing and simultaneously working on an electric power station and a water duct in one of the city's districts. A company set up with the participation of local residents is building an all-purpose sports palace Wukesong (Five Pine Trees) in the west of Beijing. It will host a basketball tournament. After 2008 this centre will become private. Other Olympic facilities will also be used for trade and entertainment. For example, the Olympic water sports centre - the Water Cube - will become Beijing's biggest water leisure facility. The two thousand flats built for athletes will be sold.

It is striking that the thrifty Chinese are spending money on such an unusual scale. Their Olympic budget extends to projects in cities that will not host the Olympics. The steppe-located city of Hohhot will get a new airport worth $70 million and a fast highway linking it with Beijing. This is done to back up the capital airport in case of heavy rains during the games.

The Beijing Organizing Committee rejected my apprehensions about huge spending and an ability to recoup it. A high-ranking Chinese official said: "The main goal of the Olympic investment is to create an infrastructure that will serve the people of Beijing after 2008 as well. We will make the Olympic budget profitable. We are doing all we can for our games to be one of the best and they will bring us money."

The Chinese have already started making money. A year before the games, Chinese shops abound in Olympic souvenirs and goods with Olympic symbols. There are bright ads of the future games all around, even at the bottom of the Great Chinese Wall. The 2008 Olympic symbols have already reached Moscow. Considering the profits that the Olympic Organizing Committee will make from selling the rights to television broadcasting of competitions, sponsor incomes, and money from ticket sales (worth almost one billion dollars), it is easy to believe that the Olympic Games in Beijing will not bring financial losses.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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