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Updated: 19/08/2008 | 10:53 AM IST
Chinese economy not to suffer from post-Olympic blues
Press Trust of India
Tuesday, August 19, 2008 (Beijing)
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With the Olympics halfway through, officials have started reassuring the world that China will not suffer from a "post-Olympic recession" due to the scale and potential of its economy, the world's fourth largest.

"The Olympic Games won't be a watershed for China'seconomic growth," said Wang Yiming, vice-president of the Academy of Macroeconomic Research, a think-tank under the National Development and Reform Commission, the country's top planning body.

"The fundamentals propelling the country's economic development over the past 30 years will remain even after the Games," he said.

The Chinese economy grew at a blistering 11.9 per cent in 2007. But the growth slowed down to 10.1 per cent in the second half of this year, raising concern that the economy could suffer after the August 8-24 Games.

The direct impact of the Games has been limited because of the size of country's economy, Wang said.

China won the right in 2001 to host the Olympics and its economy has grown at an average rate of 10.5 per cent since.

A number of factors, such as the nation's entry into the World Trade Organisation and the Olympic-related investment boom, have boosted the economy and made it the world's fastest growing.

Chinas gross domestic product (GDP) totalled 13.0619 trillion yuan ($1.9062 trillion) in the first half of 2008, a 10.4 per cent increase year on year. The countrys GDP was 24.6619 trillion yuan in 2007, ranking fourth in the world.

To prepare for the Games, Beijing spent about 13 billion yuan ($1.89 billion) to build sports facilities and 280 billion yuan ($40.75 billion) to improve urban infrastructure.

The massive investments helped Beijing's economy grow an estimated 10 per cent faster in the past seven years, said Yang Kaizhong, president of Beijing Economic and Social Development Research Institute.

But the 293-billion-yuan bill, hefty as it is, only accounted for 0.55 per cent to 1.06 per cent of China's fixed asset investment between 2005 and 2008, the peak time for Olympic-related investments, Wang was quoted as saying by China Daily.

And Beijing, the main recipient of Olympics-related investment, only accounts for 3.6 per cent of the country's gross domestic product (GDP).

Officials say China will continue its substantial investment in infrastructure even after the Games and that would help sustain the economy's growth momentum.

Other mega-events, such as the 2010 Shanghai World Expo and the 16th Asian Games to be held in Guangzhou the same year, are also likely to boost the economy, Wang said.

Earlier, the Chinese central government said it would strive to maintain a stable and fast economic growth while curbing inflation.

The country, especially its exports sector, has already felt the pinch of a falling growth rate and rising costs of labour and raw materials. More than 67,000 small- and medium-sized enterprises have reportedly had to shut down in the first half.

"Growth is likely to slow after the Olympics" but not because the Games would be over, Wang Tao, an economist with UBS Securities, said.

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