Going for gold
Aug 14th 2008 | BEIJING
From The Economist print edition
The Olympics have not brought Beijing’s businesses the boom they hoped for
YABAO ROAD in Beijing’s embassy district is normally bustling. Russian traders scour its wholesale shops for furs and boots. Hawkers throng the pavements. The street is jammed with taxis and pedicabs. But the Olympic games have begun. Yabao Road is now strangely quiet.
Only a few months ago many shopkeepers, restaurants and hotels were expecting these to be boom times as big-spending foreigners flocked in for the games. Today many businessmen in and around the capital are disgruntled. So too are other citizens who find that even some outdoor food markets have been closed as part of an Olympic spruce-up.
This should be a busy season for Yabao Road, as Russians arrive to make bulk orders of clothing for the winter and other cheap goods. But Chinese traders say the Russians, like other foreigners, have suffered from the tighter visa requirements introduced by China in the build-up to the games. They say police checkpoints ringing the city and restrictions on lorry traffic entering Beijing have made it much more difficult to bring in goods. One shipping-company manager says that demand from traders for commercial space in Yabao Road has fallen sharply.
Official predictions for foreign visitor numbers in August are vague. Figures ranging from 400,000 to 500,000 are commonly cited (in August 2007 there were 420,000 visits by foreigners). But for many months these estimates have hardly been revised, despite signs that there are far fewer arrivals from abroad than expected. In June visits to Beijing by foreigners (including citizens of Hong Kong, Macau and Taiwan) were down by nearly 20% compared with June 2007. Figures this week showed that in July they fell by more than 30% compared with last year, to 270,000, with Russian arrivals down by 47%.
Officials say one-fifth of rooms at the city’s 120-odd designated Olympic hotels were unoccupied after the games started on August 8th (they finish on the 24th). But no figures have been published for the 700 others. Price-cutting at many hotels suggests there may be a glut of rooms. Some bars and restaurants say business is lacklustre too. The owner of one upmarket nightclub says he had been expecting a packed house “all night, every night up until dawn” during the games. But in fact business is much as usual.
At least the police are not rigorously enforcing a threatened ban on carousing after 2am. They have, however, cracked down on prostitution, depriving many of Beijing’s seedier bars and night-shift taxi drivers of business. Olympic traffic controls and security measures, as well as the lure of sport on television, seem to be keeping people at home anyway.
Manufacturers are also suffering more than they had expected. To curb pollution during the games, the authorities have closed all construction sites in Beijing as well as dozens of factories and quarries in and around the city for two months. Others have been ordered to cut production. Some, such as the Beijing Eastern Chemical Works, are keeping workers occupied by getting them to repair machinery. But at the nearby plant of Beijing East Asia Aluminium Industry, a worker says that hundreds of employees are staying at home on basic pay. The factory has not been ordered to shut, she says, but has had to close because of transport problems caused by the games. Officials have given warning that many more factories could be closed if more drastic measures are needed to clear the (still smoggy) air.
Many economists say the disruptions are unlikely to have a lasting impact on economic growth in the city. Last year Beijing’s output grew by 12.3%. In the first six months of 2008 it grew by 11% compared with the same period a year ago. Officials say this pace is likely to be maintained for the rest of the year, in line with a slight slowing of China’s overall growth-rate. JP Morgan Chase, an investment bank, said in a recent research note that industrial and construction activity hit by the games should “rebound” after the Olympics. In the meantime, the games are not winning any medals from Beijing’s businessmen.