The transport restrictions and factory closures that China has ordered as part of its drive to clean Beijing's air for the Olympics could lead to a dip in overall economic activity in the short-term, economists have forecast.
Hoping to cut down on smog during the Games, authorities have shut down dozens of polluting factories in Beijing and neighbouring provinces and are significantly limiting traffic in and out of the city. They have also banned certain goods from being shipped for security reasons.
Many economists have said that the effect of those measures would probably be offset by factories in other parts of the country ramping up production and by an Olympics-related boost to Beijing's tourism industry.
Hong Liang and Yu Song, economists with Goldman Sachs, said however that evidence was mounting to the contrary. "While the long-term economic impacts of the Olympic Games are likely to be minimal, it increasingly looks like the Games's short-term economic impacts are likely to be negative," they wrote in a research note.
Mr Liang and Mr Song expect the measures to lead to a visible slowdown in both production and consumption this month and next, to be followed by a rebound in October after the restrictions expire on September 20th.
Many economists expect China's economy to slow in the second half, as weaker overseas demand and the stronger yuan drag down exports and tightening measures at home dampen investment. Annual growth slowed to 10.1 per cent in the second quarter, down from 11.9 per cent in all of 2007.
Economists agree that the end of the Games themselves will not contribute significantly to any long-term slowdown, as has been experienced by some past host nations, including after the Seoul Games in 1988, Barcelona in 1992 and Athens in 2004.
The end of the Olympics will allow authorities to shift their focus back to the many other pressing problems waiting to be tackled, said William Hess, greater China manager for Global Insight.
"The Olympics have been a giant distraction when it comes to policymaking, and movement on issues such as energy pricing and power shortages, rising producer costs and the plight of SMEs [small- and medium-sized enterprises] is arguably overdue," Hess said.
- (Reuters)
