Muscle power times three

Beijing's winning bid for the 2022 Winter Olympics has given regional plan new impetus

Almost as soon as the International Olympic Committee announced seven weeks ago that Beijing would host the Winter Olympics in 2022, economic fundamentals in the capital, and more particularly its co-host city Zhangjiakou, began to shift.

Some property developers in the town 220 kilometers northwest of Beijing raised their prices 50 percent within minutes of Thomas Bach, president of the IOC, delivering the decision in the Malaysian capital, Kuala Lumpur.

A banner promotes Beijing's 2022 Winter Olympic Games at a ski resort in Chongli, Zhangjiakou, Hebei province. Photos provided to China Daily

Mats Harborn, vice-president of the European Chamber of Commerce, says the 2022 Winter Olympic Games are likely to generate a lot of spending and wealth in Jing-jin-ji. Provided to China Daily

Also following the announcement, there seemed to be a decided air of excitement in Chongli county, Zhangjiakou city, Hebei province - a main competition venue for the Games - as government officials and businesses contemplated the benefits that staging the event from Feb 4 to Feb 24 in 2022 will reap them.

However, it is unlike the Beijing Olympics in 2008, when China was anxious to demonstrate to the world its ability to host a huge international event and at the same time promote the capital and the country as places to visit and to do business. Those organizing the 2022 Games are under no such pressure.

Instead, many economists and industrial experts regard the Games as a springboard that will give a huge fillip to the central government's plans to develop the cities of Beijing, Tianjin and the surrounding province of Hebei as one mighty agglomeration. That idea has been gestating for several years now, but it was only in April that detailed plans received the imprimatur of the country's top leaders.

Furthermore, the comprehensive plans for the Beijing-Tianjin-Hebei agglomeration, whose population is 100 million, are being seen as a possible model for urbanization as the country adapts to a slower, different kind of economic growth, says Li Guoping, professor of the School of Government at Peking University.

"Hosting the Winter Olympics will obviously boost the coordinated development of Jing-jin-ji," he says, referring to the Chinese abbreviation by which the three jurisdictions are known.

Apart from events that will be held in Beijing and in Zhangjiakou in 2022, others will be held in Yanqing county, 90 kilometers northwest of the capital.

Before the announcement of Beijing's winning bid, Wang Anshun, the mayor of Beijing, said that applying for the Games and doing so successfully would accelerate the city's building of transport and other infrastructure as well as planning for growth.

"The Games will result in improved healthcare, education and other basic public services and promote sports culture, tourism, leisure and the growth of many other low-carbon industries. In particular it will speed up the implementation of measures to tackle the problem of air pollution, promote employment in economically deprived areas and promote the combined, sustainable development of Beijing and Zhangjiakou."

Though economic development in the past 30 years or so has been rapid across the country, Li says, there has been an imbalance between growth in big cities and in small ones, on top of wide regional economic disparities. Many big cities have faced severe social and environmental challenges, he says.

Jing-jin-ji is typical of this. Beijing fulfills many functions apart from its role as a capital, bringing it serious urban problems, including a high population, road congestion, air pollution and soaring property prices. At the same time the three areas have had to grapple with depleted groundwater resources and environmental pollution, problems contrasting sharply with an abundance of other natural resources and robust economic growth.

"The regional challenges mean that coordinated development is urgent, and in integration the priority will be transferring the functions unrelated to Beijing's status as the capital city to Tianjin and Hebei," says Ji Dejiang, partner and vice-president for Greater China of Roland Berger Strategy Consultants.

As the country has pressed ahead with reform and opening-up, the economic epicenter that is the Pearl River Delta has grown, as has the Yangtze River Delta area, on the back of an inflow of foreign capital, and that has motivated international companies to enter the Chinese market.

However, now the country faces the problem of how it can innovate afresh and develop new engines for growth as it grapples with the so-called new economic normal and the problems that earlier growth have brought. The coordinated growth of Jing-jin-ji, with Beijing a center of innovation, stands ready to act as an example, says Zhu Zhenxin, a researcher with Minsheng Securities in Beijing.

The Winter Olympics had earlier been factored into the blueprint of Jing-jin-ji's development, and this is likely to become more evident when flesh is put on the bones of that plan, to be made public later this year.

In the blueprint, integrating the region's transport, environmental development, and industrial transfer and upgrading have been at the forefront, and the Games development plan will fit on top of that.

Ji, of Roland Berger, who has been advising governments and companies making plans for Jing-jin-ji, says all parties eagerly await the detailed plan. Work on that is likely to be accelerated as a result of Beijing having received the nod for the Games, he says.

Infrastructure construction happens to be the most urgent task for the Games and for Jing-jin-ji, too. All Olympic events on ice will be held in Beijing, most of the venues were built for the 2008 Games. Events on snow will be held in Yanqing, most of them in Zhangjiakou, at an altitude of more than 2,000 meters, and where a ski resort has been operating since 2008.

Economic hopes have long been pinned on Zhangjiakou. Its GDP was 136 billion yuan ($21.4 billion; 18.9 bullion euros) last year, 4.7 percent of the whole of Hebei. The city has 17 counties, 10 of which are impoverished by national standards.

"The northwest of Beijing is mountainous, so building up transport there is more difficult and expensive than is the case with other areas nearby," says Chen Jian, director of the Beijing-Zhangjiakou Winter Olympics Research Center.

"Because governments have tended to do the easy jobs first, the region's transport lags that of other areas, but for the Games the transport deficiencies in northern Hebei, particularly in Zhangjiakou city, really need to be fixed.

An important element of that effort will be a high-speed rail link, earmarked to open by about 2019, that will whisk passengers from Beijing to Chongli in just 50 minutes, compared with the present three to four hours drive. An expressway from Beijing to Chongli and many more new roads are planned, and two airports will be built.

"What the Games are going to do is create important transport links in Jing-jin-ji, and these will benefit Zhangjiakou in particular," Chen says. "Over the next few years the Games will help Zhangjiakou finally shed its cloak of poverty. If things go according to plan, Chongli will become a shining city that eventually will be renowned for its leisure and tourism industries."

Zhao Qiong, marketing director at Genting Resort Secret Garden, a winter resort located where Games events will be held, says that earlier this month more than 8,000 construction workers are to start work on facilities for the Games.

The resort now has 35 pistes, and another 53 will be built before 2022, three years earlier than had been planned. Genting has a five-star hotel there, and another five will be built soon, Zhao says.

After Beijing gave a briefing on its bid at IOC headquarters in Lausanne, Beijing Mayor Wang pledged that the strong efforts would continue to clean up air in the capital.

On July 27 China Business News reported that authorities were formulating the country's first regional air control plan and that control measures in Jing-jin-ji were top of the agenda. Five days earlier, Beijing and Tianjin had pledged 860 million yuan to support air quality control in Hebei, the magazine said, and 5.9 billion yuan would be spent on such measures in Jing-jin-ji this year.

"The government has pledged to protect the environment, and steps being taken now are making that a reality," says Wu Qi, managing partner and CEO of Roland Berger Greater China.

"Hosting the Games brings with it international scrutiny, and that is going to speed up the implementation of pollution control measures for the region and bring other measures for protecting the environment."

Jing-jin-ji still relies heavily on coal for its energy, and that is a large contributor to air pollution. However, Zhangjiakou has been approved as a national renewable energy demonstration area, and a photovoltaic industry center is being planned.

Wherever you go in Chongli you can see evidence of local efforts to be environmentally clean: spinning blades on windmills high in the mountains, Zhangjiakou having attracted investment from more than 30 big wind-power companies, which have built 77 wind farms.

A report by Huatai Securities says Zhangjiakou will speed up the adoption of modern industrial systems that use new energy and new technology, and promote tourism and services as key industries.

Jing-jin-ji's environmental protection industries will continue to grow, the report says, adding that investors are also pouring money into real estate, machinery making and new-energy industries. So the city will embrace an economic model that is decidedly green, with agriculture, tourism and leisure industries at the forefront, and it is likely to become a role model for other cities, the report says.

Sports industries, particularly those related to winter sports, will be direct beneficiaries of the 2022 Games. Beijing issued a document about the growth of its sports industries last month saying that by 2025 they will have revenue of more than 300 billion yuan a year, 50 billion more than now. Beijing, in its application for the Games, forecast that sports industries in China as a whole would generate revenue of $800 billion by 2025.

Zhao Qiong says the number of visitors to Genting Resort Secret Garden has risen 50 percent a year in each of the past three years, and with the publicity the Games bid generated, even over the past summer it was packed with tourists.

Hou Liang, Party secretary of Zhangjiakou city, says it has signed more than 220 investment contracts worth more than 20 million yuan each over the past year, and about 70 percent have involved investors from Beijing. Developers are seeing Jing-jin-ji as a good location for aged-care homes, he says.

Mats Harborn, vice-president of the European Chamber of Commerce, who has lived in Beijing for more than 18 years and who was the lead writer for a position paper that was issued earlier this year, says the Games are likely to generate a lot of spending and wealth in Jing-jin-ji, and infrastructure spending will boost GDP in the region and create many jobs.

"We hope though that this development will be done in a holistic and systematic way, taking into account any likely adverse environmental impact that large-scale construction could have and trying to minimize it. Likewise, we hope the authorities use this chance to build things from the ground up and orientate these developments on international best practice, for example with regard to the energy-efficiency of buildings, or minimizing traffic congestion through prescient planning of any new road network."

Wang's promise about air pollution is commendable and Beijing has already done a lot about it in the recent past, he says.

"However, this must translate into concrete policy actions: upgrading energy-inefficient infrastructure, particularly buildings through improved insulation, is one example. Another thing is to move to better and more realistic standards in the fuel efficiency of cars. I presume that foreign communities will respond well to and be very appreciative of permanently cleaner air."

Great fun was made of so-called APEC blue last year, referring to the clear skies that greeted leaders who attended the Asia Pacific Economic Cooperation forum near Beijing over three days in November, and Wu says he looks forward to seeing "Olympic blue", but something that will be a little more durable.

He is also keen to see innovation in the way the 2022 Games are organized, especially given that great emphasis is now being put on keeping costs down. Official figures for the Games put the budget at $1.56 billion, of which 6 percent would come from government subsidies, and social capital will be brought in on a large scale.

Wu says he would like to see the government make full use of public-private partnerships, so more businesses with a lot of expertise can be involved in building and managing Games infrastructure.

He cites the Bird's Nest, the main stadium for the 2008 Games, saying that after the Games it failed to turn a profit, until it was put under new management that has made it financially healthy.

"The 2008 Olympics were a dream come true for China, so the government was keen to spend a lot on them. But this time the emphasis is on market forces doing their work, especially amid the global economic slowdown, because with market-oriented capital coming into play, more thought will be put into the cost, profit, future operations and all other aspects, and everything will be done in an extremely professional way."

chenyingqun@chinadaily.com.cn

(China Daily Africa Weekly 09/18/2015 page1)