How will the Beijing Olympic Games impact on the capital's economy? Pan Fan, who is in charge of economic surveys in Beijing under the National Bureau of Statistics, has provided some clues in a recently published report, Olympic Investment and Beijing Economic Development.
China Daily reporter Li Jing spoke to Pan to get more details.
What is Olympic investment?
According to the Beijing Olympic Action Plan, Olympic-related investment includes three parts. They are investment exclusively for Olympic competition venues and related facilities, and investment in the city's infrastructural construction that is not part of the city's 10th Five-Year Plan (2001-05). The third part of the investment is for such projects as environmental protection and transportation, which has already been included in the 10th Five-Year Plan and is referred to as indirect investment.
In our published report, we only took into consideration the first two investments, because they are new investments as a result of the Games.
How will the money be spent?
Nearly 80 percent of the new investment will be focused on postal and telecommunications, infrastructural facilities, and improvement of the living environment. The investment used in infrastructure is estimated to generate 10 percentage points higher economic growth than the average level.
Is there any other new investment?
Yes. Apart from the direct investment mentioned above, tourism revenues generated by the Olympic Games and the funds that the International Olympic Committee (IOC) will allocate to the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) are two other major parts of the new input.
Any estimates on such additional investment?
We estimated that 2 million more tourists will visit Beijing during 2008, 300,000 of whom are from overseas. These additional tourists will help promote the development of transportation, hotels, catering, entertainment and other service sectors. It is predicted that every domestic tourist will spend 1,200 yuan (US$150) and every overseas visitor will spend US$1,050 during their stays in Beijing. So, the total additional revenue is estimated at nearly 7.7 billion yuan (US$963 million). All the new investments have been included in the input-output analytical model in our study.
How will the new investment impact on Beijing's gross domestic product
(GDP)?
According to the input-output model, the new input will help the city's GDP grow an annual average of 0.8 percentage points higher than usual from 2004 to 2008. To be specific, the new investment will add 1.03 percentage points in 2006, 1.14 percentage points in 2007 and 0.85 percentage points in 2008. We estimated that between 2005 and 2007, when the Olympic investment reaches its peak, the average annual growth rate of Beijing's GDP will be 12.3 percent, at current prices.
What are the sectors that will benefit from the Olympic Games?
More than 50 sectors will be connected with the Olympic Games directly or indirectly, and the new investment will boost their development to varying degrees.
For example, the "Olympic factor" will add 5.45 billion yuan (US$680 million) to the city's finance and insurance sector in five years from 2004, and 17.28 billion yuan (US$2.16 billion) to the construction industry.
The two sectors, along with retail and wholesale, real estate, computer and software, communications and computer equipment manufacturing, leasing and services, and scientific research and technologies, will further strengthen their positions as Beijing's pillar industries in the years ahead. The total value added of the above eight sectors in total will account for more than half of the city's GDP.
The tertiary industry, or the service sector, will grow faster than the secondary industry and agriculture. It may even outpace the total GDP growth rate. By 2008, the service industry is expected to take up about 70 per cent of the city's economic capacity in 2008.
In general, the "Olympic factor" will bring in an additional 105.5 billion yuan (US$13.2 billion) to the city's total economic output between 2004 and 2008.
How about the new job opportunities?
We estimated that about 1.82 million new jobs will be created during the process of preparing for and hosting the Olympic Games. Sectors like the construction, high-tech, manufacturing, logistics and social service industries will be the major job providers. The construction industry alone will provide 430,000 new jobs between 2004 and 2008, followed by the retail and wholesale industries, which will generate 130,000 new jobs.
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The year 2007 will see the peak of the Olympic employment, with more than 510,000 new jobs created. There will be about 430,000 new jobs in 2006, 406,000 in 2005, 372,000 in 2008 and 95,000 in 2004.
