This apocalyptic scenario has been painted by China Cassandras predicting a long-anticipated meltdown. But a post-Olympics crash is highly unlikely, according to economists.
“Retail investors at the moment are very much in euphoria and the Olympics story will sell,” said Tai Hui, an economist at Standard Chartered in Hong Kong. “But I don’t think you will suddenly wake up one morning [after the games] and [find that] everything [is] lost.”
One event, big country
Jonathan Anderson, chief Asia economist at UBS, dug up some numbers suggesting that Beijing 2008 will barely leave a dent on China’s economy. Comparing the populations of recent Olympics host cities to their corresponding national populations, Beijing came in last place, representing 1.1% of China’s population and less than 3% of its GDP. The impact of the games was strongest in South Korea and Greece – Seoul has 20% its country’s population and Athens 40%.
Still, the Olympics will cause volatility in some industries. Retailers and hoteliers, for example, will probably experience demand “lumps” during the games, but this is unlikely to affect annual averages. Even Olympics infrastructure can be adapted for commercial use, Tai said.
None of this evidence will appease fevered market-watchers who insist that a correction is coming.
Tai suggested the downturn could happen during the six or seven months in between this autumn’s Party Congress and the Olympics but Anderson was rather more vague.
“We don’t expect the markets to crash in the near future – but in our view this has nothing whatsoever to do with the Olympics. If there were to be a correction, it could happen before or after.”