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Beijing Games 2008 -- Risky Business For China

By CNBC.com
Tuesday, 7 Aug 2007 | 5:47 PM ET

China has a lot to gain from hosting the 2008 Summer Games, but there are two areas that pose particular risks to the country’s image and reputation -- political dissent and the environment.

The Chinese government is no doubt taking steps to deal with both issues but a lot will depend on what happens during the games Aug. 8-24.

One big issue is “what the air looks like,” says Dwight Perkins, a Harvard University economist, who specializes in China. Perkins notes the number of automobiles has increased at “a tremendous rate.”

Beijing is known as a smoggy city and the obvious concern is that the air quality will affect the athletes. (There’s also the possibility, however, that tourists -- and to a lesser extent athletes -- will get sick because of tainted food.)

At an early November news conference, International Olympic Committee President Jacques Rogge offered a vote of confidence, saying "We believe that what they are doing now will yield good results by August next year."

That follows a less-than-warm endorsement by the IOC is late October, when it said Beijing's some events might have to be postponed a day or two depending on air quality at the time.

Around the same time, a 163-page report by the United Nations Environment Program said concerns remain about Beijing's air pollution but the city has made "significant strides" towards hosting a so-called Green Olympics.

After being picked to host the games in 2001, China established a five-year campaign known as the “Green Olympics” meant to address air and water quality.

Don Wyatt, a China expert at Middlebury College, estimates that China has spent $15-$25 billion to improve the environment since then.

The government has moved factories such as steel plants out of the city and eliminated coal-fired power plants. There is also the possibility of a construction ban starting in January 2008.

China watchers also say it is likely the government could take short-term steps around the time of the games.

The city, however, recently ruled out any policy to restrict the use of private autos, but the government will reportedly introduce tougher emissions standards in 2008.

The recent opening of a new city subway line -- for which the government has already slashed fares -- is also expected to help.

Crowd Control

Another potential problem area is dissent – and what if any is captured by the western media. (NBC will televise the games.)

“It could become a vehicle for protests,’ says Philip Levy, a resident scholar at the American` Enterprise Institute, who has been an economist for the Council of Economic Advisors and was involved in the recent high level talks between the U.S. and China. Levy says managing dissent and protests won’t be easy.

It is safe to say that the government will try to micromanage the situation as much as is possible. Wyatt says more military police units have been introduced around the city and still more will be added. More surveillance cameras will be installed as well.

Wyatt says authorities have been increasingly tracking the activities and cracking down preemptively on suspected troublemakers, in order to ensure that they draw absolutely no media attention.

Despite images of the government’s crackdown in Tiananmen Square in 1989, public protests are common in China, although many of them happen in rural parts of the country. There were tens of thousands of social disturbances last year.

Dissent is a "big deal,” says John Rutledge, founder of the private equity firm Rutledge Capital, who is also a visiting professor at the Chinese Academy of Sciences in Beijing an economic advisor to the local government.

One wild card is the tens of thousands of migrant workers in Beijing, a city of 15 million people. They’re bound to lose work if there is a construction moratorium and that will create an unhappy group of residents, assuming they are, in essence, deported by the government, adds Rutledge. Other groups of unemployed people could also create public disturbances.

The games will indeed put the spotlight on Beijing and China. “That won’t always be flattering,” says Levy.