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Games success to bring next big wave of capital Print

 

Original Text from China Daily

The biggest characteristic of the Olympic Games in the 21st century is the "globalization of the main stadium of the Games". The wide availability of digital television broadcasts via satellites, the popularization of the Internet all over the world and the ubiquitous mobile phones are all play their part in bringing live coverage of the Olympics to the whole world. None of the past eras was able to make the Olympiad a universal festival of peoples all over the world like today.

In this colorful era, Beijing showcased to the rest of the world a "civilized and disciplined China" through the 29th Olympiad. The Chinese capital became the center of ordinary people's attention throughout the world.

The Chinese culture and civilization, perfectly blending tradition and reality, and a host of new world records set in so many sporting events at the spectacular venues throughout Beijing stoked many an average TV viewer's urge to go to China and see it with his or her own eyes. This urge will bring the city of Beijing another huge tide of tourists. And this alone will again put the Chinese capital under the spotlight, while China will again become a gas station for the deepening globalization.

Many people habitually refer to past experiences when they think of the post-Olympics Chinese economy, but they must not ignore the changes brought by the Games. During the 29th Olympiad more than 80 foreign heads of state attended the opening ceremony and many more business people were in Beijing to "size up" China's domestic market as well as watch the Games.

Since the transitional period following China's accession into the World Trade Organization (WTO) ended, the country's market of services such as logistics, circulation, telecom and finance has been opening up and many well-known foreign companies cannot wait to take a bite off the juicy pie they have been drooling over for years.

 

If China's accession into WTO turned the country into a vast reservoir for direct investment by manufacturers around the world, then the Beijing Olympics will usher in another influx of foreign investment by services such as commerce, finance and travel from around the world. It is a powerful trend that cannot be stopped.

The reason for this development is very simple: investment is first and foremost for profits. Places with the least risks and highest return rate for investors always attract the most capital and become gathering grounds for various industries.

Reform and opening-up have given China three decades of sustained economic boom so far and one of the driving forces behind this explosive development has been foreign investment. Naturally, what has been so irresistible to foreign investors can only be China's unmatched room for making profit.

If the slogan "Liberate the mind for reform and opening" that China made 30 years ago can be seen as a "political insurance policy" the Chinese government bought for foreign investors, the successful hosting of the Beijing Olympic Games today is a "full insurance package" that China as a responsible, civilized and rule-abiding major power is offering to investors around the world.

A "China risk theory" has been circulating in the world since 2004, giving rise to a "China+1" format, where major countries engaged in investment talks with China insisted on diverting investment risks by adding another investment destination. The reality is, however, the Chinese economy has amazed the world with a double-digit growth rate five years in a run, letting the "China risk theory" prove itself wrong and the world know that China is still the most attractive market around.

Currently, faced with rising inflation, appreciation of the Chinese currency and cost of labor, some enterprises from developed countries seem to have started worrying about a new risk in China characterized by "macro overheating and micro tightening". But President of the International Olympic Committee Jacque Rogge undoubtedly dismissed the "China risk theory" with a standard commonly accepted around the world when he described the Beijing Olympic Games as "truly exceptional" upon its conclusion.

By successfully hosting a great Olympiad in Beijing China has sent a message to the rest of the world: the post-Olympics China will be an open, transparent, fair, just and dynamic market where the Olympic Spirit thrives and universal rules govern fair competition.

This means foreign investment from around the world led by developed countries will unavoidably flow to the "rules-minded Chinese market". The effective combination of a fully open Chinese market with healthy foreign investment and local capital filled with the spirit of all-round participation will no doubt bring about a milestone upgrade of China's market economy system to suit the new era.

This is the logical future of the post-Olympics Chinese economy and what makes China's different from past "post-Olympics economies".

Admittedly, the current international economic climate worries people everywhere. One concern is about the uncertain direction of developed economies, which adds to risks the world economy is faced with. Another rises from a new trend of unbalanced development in world economy. Still another comes from the fact that global oil price has reached an unprecedented altitude and become a new variant in the world economy.

In a long-term look ahead, there is a strong uncertainty about how the world economic system, the international political order and the international currency system will change; while the short-term direction of the supply and demand situation of strategic resources such as oil, of the volume and direction of global capital flow and of the exchange rate of the US dollar looks uncertain, too.

Right now, while people are still unsure whether the US economy will get over its financial mess and back on the track of healthy growth, the Japanese and European economies are showing signs of going downhill, making the emerging market economies' prospects just as uncertain.

Particularly worrisome is that the Doha round of WTO talks and the East Asia Free Trade Area process both ran into protectionist obstruction rarely seen these days. The world economy seems to be entering another round of structural readjustment.

There are many complex and shifty risks hidden in the external environment around China's post-Olympics economic development. They constitute a problem for the Chinese economy that must not be overlooked as well as an issue that must be taken into account when we analyze China's post-Olympics economic development.

The author is a researcher with China Institute of Contemporary International Relations

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