It’s not often I make forecasts on what will happen in China, usually they leave you with egg on your face. However, this time I’m going to venture that China is going to face a big post Olympics hangover. Below are my thoughts.
There will be big rise in Inflation due to the governments efforts to artificially keep inflation in check before the Olympics will be removed. As a consequence interests rates will have to rise to keep inflation in check.
Even long before the Olympics there has been a housing boom in Beijing and other cities. After the Olympics thousands of hotel rooms are going to converted into flats adding to an already saturated market.
The Stock Market
All ready more than 50% down on its peak, it will continue to fall as inflation rises and global growth slows down. Many small investors are being seriously burned.
Jobs and Output
China’s industrial model based on low wages appears to be stalling. In the industrial heartland of Guangdong factories are having to deal with a number of increasing problems that are cutting profit margins and seeing record factory closures.
Some of those factors are:
- Falling global demand
- Higher wage costs
- Difficulty in recruiting new labour from the provinces
- New environmental and labour laws
- Dislocation by foreign and Chinese companies to countries with lower costs.
Up until the 1950s, Beijing was an architectural wonder, an almost perfectly preserved metropolis from the pre-industrial era. Many ancient towns and cities exist around the world, but Beijing was enormous: 62.5 square kilometres (25 square miles) large including lakes, parks, palaces and of course the Forbidden City, the emperor’s home. Surrounded by some of the greatest fortified walls of antiquity, it was a microcosm of ancient China, a city that symbolized the political and religious ideals of a system that had existed for twenty – five hundred years. Ian Johnson, Wild grass, p. 101
Part One- Beijing 1990
Stepping out onto the concourse outside Beijing railway station into the sharp winter sunlight we saw the number 20 bus pulling in. “That’s the one!” I shouted to Margie. We stormed it with the rest of Beijing. The descending passengers didn’t stand a chance as the mob rushed the opening doors. I tried to use my backpack to annihilate any opposition in my quest to get a seat. However, despite my efforts, the old ladies with their jabbing elbows still managed to get on before us. But we did get our bums on those precious seats in the end. Two foreign tourists getting off the bus looked at us in total shock and disgust. But, hey, we had already been out in Western China for 2 months, and when in Rome… Welcome to Beijing 1990.
It’s a long time ago, but Margie kept a diary, so the memories come flooding back every time we reread it. I remember a cold, hazy city. The sun, though occasionally glaring, was more often weak and blotted out by a polluted sky (worse than now). When the clouds covered the sky, snow sometimes fluttered in the air, but mostly melted before it had time to settle. The people looked pretty poor, though there were some inklings of an incipient urban sophistication we hadn’t seen elsewhere in China. Something was happening but we couldn’t quite put our fingers on it…..
For more go to: HolaChina: Your Gateway to China
COHRE ( COHRE – Centre On Housing Rights and Evictions) claims that the Beijing Municipality has forcefully evicted more than a one and a quarter million Beijing residents to make way for the Olympic Games in 2008.
“The Beijing Municipality and BOCOG have violated the housing rights of over 1.25 million residents of Beijing in pursuit of relentless economic growth, including the hosting of international showpieces such as the Olympic Games. The mass displacements and evictions implemented in Beijing are a clear case of the illegitimate use of evictions as a tool of development by the Beijing Municipality and BOCOG, in a bid to transform the city into a ‘world-class metropolis’ fit to host the ‘best Olympic Games ever.’ Despite courageous protests inside China, and condemnation by many international human rights organisations, the Beijing Municipality and BOCOG have persisted with these evictions and displacements. COHRE’s research has shown how the awarding of the Olympic bid to Beijing by the IOC has been used as a pretext to ride roughshod over rights of affected residents,”.
Apart from the forced evictions it should also be noted that hundreds, if not thousands of Beijing’s historic hutongs (old streets and home to the traditional courtyard houses), palaces and temples that have been reduced to rubble in order to be replaced by wide featureless avenues, souless shopping centres and a an opera house that locals call the Rotten Egg.
Enjoy The Games!