Two decades ago, the Americans made the Los Angeles Games the first ever money-making Olympics. They invented the concept of the Olympic economy.

Although so far no official announcement has been made, all the signs indicate that the recently concluded Athens Olympics made a financial loss. Even before the Games opened, Deputy Finance Minister Petros Doukas said the Greek government had committed a total of 3 billion euro. This far exceeded the original budget, which had been set at 1.14 billion euro. After the Olympic curtain rose, the Greek government twice raised its cost estimates first to 6 billion euro and then to nearly 8.6 billion euro.

Four years ago, the Olympics cost a well-prepared Australia only US$5 billion. However, time problems saw Greece run heavily into debt according to John Coates, chair of the Australian Olympic Committee.

As the Athens Games drew to a close, Beijing Mayor Wang Qishan accepted the Olympic flag from the hands of International Olympic Committee (IOC) President Jacques Rogge. With this symbolic act, the attention of the world shifted to China. It will be the first developing country to host the games in modern Olympic history. Beijing can learn a lot from Athens and other earlier host cities.

“The Olympics can change a person's life,” said Deng Yaping, former Olympic table tennis champion and member of the Beijing 2008 Olympic Games Bid Committee, speaking in Moscow on July 13, 2001.

The Olympics can also bring great changes to a city or even a nation.

In 2001, speaking four days after Beijing succeeded in its bid for the 29th Olympic Games, National Bureau of Statistics spokesperson Ye Zhen predicted that over the next seven years, Olympic effects would add an average of 0.3 to 0.4 percentage points a year to national gross domestic product (GDP).

The Beijing Municipal Statistics Bureau expects the city itself to benefit to the extent of no less than 2 percentage points a year.

An authoritative source at the General Administration of Sport, speaking on condition of anonymity, expressed confidence that the 2008 Olympics will promote the Chinese economy in terms of investment, consumer demand, and employment.

The Beijing Organizing Committee for the Games of the XXIX Olympiad is working on a budget of some US$1.6 billion. Then there will be additional major expenditure in environmental protection, in improving highway and railway links, and in the construction of Olympic venues. The total outlay for the Olympics is expected to run to some 131 billion yuan (about US$16 billion).

Beijing expects a big pre-Olympic investment boom. According to sources at the State Statistics Bureau, new investment might total 280 billion yuan and 64 percent of this will be in infrastructure construction.

The Beijing Municipal Development and Reform Committee is optimistic about Beijing's Olympic economy. In 2001, it estimated that over the following seven years, investment and consumer demand in the city would add up to 3 trillion yuan.

Beijing is baking a huge “Olympic cake”. On April 18 and 19, it hosted “Invest Beijing”, a conference aimed at market promotion for the Olympic economy. Admission tickets were 3,500 yuan each. The conference attracted many of the world’s top 500 enterprises including General Electric, Nortel Networks, Boeing, Volkswagen, Eastman Kodak, and Wal-Mart. Domestic players were also well represented by such names as Lenovo, Huawei and the Sinopec Group. All of the participants were eager to get their slice of the Olympic cake.

Inward investment will bring Beijing and its environs a spending boom in such areas as construction, communications, postal and telecommunication services, tourism, and catering.

The 1988 Olympics brought nearly 300,000 new jobs to Seoul. Preparations for the Sydney Olympics meant 150,000 new jobs in Australia. Beijing with its plentiful cheap labor can expect to gain even more jobs. The Beijing municipal government estimates that by 2008, the Olympic economy will have created as many as 2.1 million new job opportunities.

However, realistically speaking, Beijing still has a long way to go if it is to make its Games both successful and profitable.

“Besides good planning and effective coordination among different departments, public understanding is the key for a successful Olympic economy,” said Australian, Richard Kevan Gosper, chair of the IOC Press Commission.

“Just over two weeks of the actual Olympic Games will not generate an immediate effect on the economy. In fact, the Olympic economy usually yields its remarkable results over 25 or even 50 years,” said Gosper. “Naturally, the organizers need to do a lot of work to help the public acquire a better understanding in this regard.”

“Beijing owes the success of its bid to the support of the public. China is the most populous country in the world. In order to host a ‘Green’, ‘Hi-tech’, and (most importantly) ‘People's Olympics’ in 2008 as Beijing intends, a broad bridge should be established between the organizers and the public. Sydney showed that wide popular support is the key to a successful Olympics,” he said.

The Los Angeles experience was the result not only of successful market development, but also of the rational use of existing stadiums and gymnasiums. Instead of building Olympic venues indiscriminately, the city focused more on reconstructing and renovating the sports grounds and facilities it already had. This was hugely significant in keeping costs down.

In line with Mayor Wang Qishan's call for a frugal approach to the Olympics, Beijing has launched a cost-cutting exercise. The municipal government has recently scrapped plans for five of the fifteen new Olympic venues it had originally intended to build specially for the 2008 Games.

According to Vice Mayor Liu Zhihua, the Beijing organizers are now reconsidering their strategy for Olympic venues. They are working towards the goal of achieving better value by arranging for the facilities to have a long-term use after the Games are over. They will do this without compromising the quality and technological standards set by the IOC and other international sports federations.

"We will try our best to reduce expenditure on newly established venues and upgrades in an attempt to stage the Olympic Games in a cost-efficient way," Liu said on September 9 in a report to the Standing Committee of the Beijing Municipal People's Congress.

(China.org.cn by Shao Da, September 17, 2004)