China's 'value for money' Olympic Games

 China's 'value for money' Olympic Games

Despite the absence of international visitors, the Olympic Games are still considered a worthy investment by China to develop infrastructure and stimulate consumption.

Hosting the Winter Olympics is costing China billions of dollars. The large scale of spending makes this event less attractive to many cities around the world in recent years. A growing number of countries consider spending a fortune to host the Olympics is not worth it, when the tourism benefits are less than expected.

However, China has a different calculation. Beijing has long relied on massive investments in the construction of railways, highways and other infrastructure to create millions of jobs and reduce transportation costs.

With the 2022 Olympics, they also hope the event will foster a love for skiing, billiards, ice hockey and other winter sports, thereby stimulating people's spending, especially in the cold and economically difficult northeast.

Zhangjiakou National Long Jump Center for the 2022 Winter Olympics. Photo: NYT

Zhangjiakou National Long Jump Center for the 2022 Winter Olympics. Photo: NYT

For example, to create an Olympic ski area, China clad a steel hillside and covered it with artificial snow. To build a high-speed rail link between the sites and Beijing, engineers tunneled through the surrounding mountains. And to prevent Covid-19, medical forces conduct tens of thousands of PCR tests to participate in the Olympics every day.

However, with China's economy slowing, global growth prospects dim, as well as concerns about the impact of the Omicron variant, Beijing has also been wary of rising costs. Even Chinese President Xi Jinping acknowledged the event should be properly organized with a view of "simple, safe and splendid".

In fact, every recent Olympics has been controversial for its cost overruns. An Oxford University study found that the average cost of the Olympics held since 1960 was almost three times higher than the original bid when the host cities offered.

The city of Sochi (Russia), which hosted the 2014 Winter Olympics, has spent and invested more than $50 billion - half of which is on infrastructure. When it hosted the 2008 Summer Olympics, China spent $6.8 billion, but that doesn't include the tens of billions of dollars in building roads, stadiums, subways and airport terminals.

This time, China set a budget of about 3 billion USD. This figure includes construction of competition venues, but does not include projects such as a $1 billion high-speed rail line and $5 billion highway.

The pandemic makes the Olympics even more expensive. Last year's Summer Olympics in Tokyo cost another $2.8 billion specifically for epidemic prevention. China's "zero Covid" strategy, which focuses on killing outbreaks, also means that infection control measures are much more complex.

China's concerns about the pandemic have dented hopes that the Olympics will attract tourists. Last fall, the organizers said they would not sell tickets to foreign audiences. Last month, they continued to announce that most Chinese residents would also not be able to attend, prompting Beijing hotels to rush to reduce room rates.

However, Chinese officials still insist they have balanced the budget. The absence of spectators means less staff is needed for the event. The organizers also saved money by canceling the welcome ceremony for foreign tourists and shortening the torch relay ceremony to just three days. Beijing is also reusing competition venues, a giant media center and other facilities built for the 2008 Summer Olympics.

At $3.1 billion, China's budget this time around is average (adjusted for inflation) when hosting a Winter Olympics, according to Oxford University researchers. "Judging by the cost of the previous Winter Olympics, this is enough to cover the cost, especially when many facilities are already built," said Bent Flyvbjerg, Professor at Oxford, evaluate.

While the host cities of the Olympics first spend heavily to build accommodation for athletes, journalists and media centers, China has a different approach, working with businesses.

In Zhangjiakou, where several competitions are being held, the government temporarily took over the Genting Secret Garden ski resort owned by a Malaysian businessman. The resort has expanded its capacity to 3,800 rooms and apartments, 10 times more than before China won the right to host the Olympics.

Lim Chee Wah, Founder and Co-Owner of the resort, said he still does not know how much the government will pay for using the facility for the Olympics. However, he believes it will be well worth it.