By Dan Steinbock
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 – the reaction of the international community was rather lukewarm. Here’s why the 2022 Beijing Olympics may be China’s second shot at hosting a ‘coming out’ party.
The cost of the torch casting dark shadows
In the past 120 years, the costs of the Olympic Games have skyrocketed.
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 Montreals 1976 Summer Games, cost overruns proved so large that the Canadian city almost went bankrupt and spent nearly three decades to pay off the debt.
For instance, over the last two decades, the cost overruns of hosting the Olympic Games have risen from a minimum of 35% (Beijing 2008) to over 1,260% (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 UKs economic distress before the Brexit referendum and Sochi 2014 ($22 billion) added to Russias economic challenges amid the US-EU sanctions.The last nail in the coffin was Brazil 2016, where costs soared to $10 billion worsening the already poor economic and political conditions.
The cost of the Olympics increases exponentially. | Photo Courtesy: Business InsiderThinking big should no longer be the Olympic goal. Rather, the point is to think smart. Typically, South Koreas 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?
The four golden steps
[su_pullquote align=”right”]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.[/su_pullquote]
Cost control is the first precaution: Unlike most hosts, China has a track record of overspending. In the case of the Summer Games, only a few hosts most impressively Beijing in 2008 have managed to keep the cost overrun reasonable. But Winter Games aim higher and beyond. While Beijings Summer Games cost $44 billion, the official 2022 budget is a mere $3.1 billion.
The second step 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 minimise the cost of construction.
Thirdly, 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, care must be taken to promote the sports economy, China needs not only world-class athletes but also the general public to take an interest. Hence, 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 maximise opportunities for post-Games use, fostering the development of winter sports in and around Beijing.
Finally, local tourism requires sustainable investment. While the current investment focuses on 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.
The possibility of a second Beijing Olympics. | Photo Courtesy: PBSNew 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 indicated by Russia 2014, South Korea 2018 and China 2022. That reflects the shift of economic power from the West to emerging Asia.
[su_pullquote]That means a China with steadier growth but higher living standards, greater innovation and consumption will host the 2022 Winter Games.[/su_pullquote]
Gala-fatigue is difficult to avoid in an increasingly international megacity like Beijing. However, much of the cost controversy could be avoided if the Olympics are organised with cost consciousness, damage control, sustainability, promotion of sports economy and sustained tourism and infrastructure investment.
Since the Beijing Summer Olympics was Chinas coming-out party, sceptics say there is no reason for a new Olympics. Yet, several advanced economies have hosted two or more Olympic Games.
In 2008, the Chinese GDP per capita was less than $7,900 and China accounted for 31 percent of the US economy and 7 percent of the global economy, respectively. That proved China’s 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. This could guarantee the celebration of China’s second “coming out” party.