By Jane Han
Staff Reporter
From the pre-Games economic boom, upsurge in nationalism, cultural receptivity and construction frenzy down to a citywide cleanup, Beijing has largely mirrored Seoul in the run-up to hosting the Summer Olympics.
But does this mean the world's fastest-growing economy is destined to face a post-Olympics economic fall like Seoul?
Some say China's economy will see a ''valley effect,'' or an economic slowdown commonly seen in Olympic host countries. Others have brushed off the grim outlook.
``China will be no exception to this unfortunate phenomenon,'' said Lee Man-yong, a senior research fellow at Hyundai Economic Research Institute.
The institute's report on China's post-Olympics economy said a downturn could be led by the country's manufacturing slowdown and a general investment slump as super-high public spending on modern facilities and stadiums will likely slow. China also has a sky-high Olympic bill of between $35 billion to $43 billion to pay off, according to Beijing's official figures.
``Seoul saw fast-track growth like Beijing in the days leading up to the Games, but the surge stopped there,'' said Lee. South Korea's annual economic growth surpassed 10 percent a year from 1986 to 1988, but fell to 6.7 percent in 1989.
The situation isn't unusual, with a recent survey by the Bank of China showing that nine of the 12 Olympic host economies experienced a setback after the sporting extravaganza.
Samsung Economic Research Institute (SERI) projected a similar outlook for Beijing, saying a cooling off of the Olympic effect will cut China's economic growth to 7.2 percent. China's expansion has slowed to 10.2 percent this year, down from 11.9 percent last year.
``A host country concentrates most of its investment in Olympic-related sectors, therefore, it is natural to lose steam days after the event,'' said Samsung researcher Lee Ahn-jae.
Economies typically suffer a deep plunge one year after the Games and see slow recovery the year after,'' he said.
``The important question is how long the slowdown will last,'' said Lee, adding that Seoul's post-Olympic economy made a pretty good comeback by planting solid industries in place.
The Chinese government has taken a few steps to boost confidence and protect against a slump, especially in manufacturing. It raised the export tax rebate for garment producers, for example, and permitted domestic banks to issue more loans.
Such measures are urgently needed, experts say, as China's manufacturing industry, one of its pillars of economic growth, is starting to shrink.
``China's economy is indeed slowing,'' said Jing Ulrich, Hong Kong-based chairman of China Equities with JPMorgan, in a research note last week. He said an export slowdown is ``rippling across the economy.''
Lehman Brothers economists also warned that Chinese manufacturing faces tough times ahead due to the global economic slump, rising production costs, tight credit, power shortages and currency appreciation.
Chinese stocks have dipped sharply since fall last year, but there are still optimists who say a moderate pullback is healthier for the Middle Kingdom over the long run.
``A key factor in post-Olympic economic performance is the size of the country and the share of the economic pie held by the host city,'' said Morgan Stanley in a report. Seoul, Barcelona and Sydney are bigger in proportion to their national economy, which is why the setback was bigger, it said.
Global pundits who discount the hangover theory say the Chinese capital accounts for just four percent of GDP ― much less than 25 percent for Seoul ― which could be easily offset by growth in the rest of the country.
jhan@koreatimes.co.kr
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