Hosting the Olympics Is Costly. For China, It’s Worth Every Billion.

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Hosting the Olympics Is Costly. For China, It’s Worth Every Billion.

ZHANGJIAKOU, China — To build an Olympic ski jump, China clad a slope with steel and covered it with artificial snow. To build a high-speed line between the venues and Beijing, engineers blasted tunnels through the surrounding mountains. And to keep the coronavirus at bay, workers are conducting tens of thousands of PCR tests on participants in the games every day.

Hosting the Winter Olympics costs China billions of dollars, a magnitude that has made the event less attractive to many cities around the world in recent years. More and more of them have come to the conclusion that the Games aren’t worth leaving with a hefty bill, white elephant stadiums and fewer benefits from tourism than they had hoped.

But China looks at the games with a different calculus. Beijing has long relied on heavy investment in building railroads, highways and other infrastructure to provide millions of jobs for its citizens and reduce transportation costs. The 2022 Games are also hoped to inspire sustained interest in skiing, curling, ice hockey and other winter sports that could boost consumer spending, particularly in the country’s cool and economically battered Northeast.

Perhaps most importantly for China’s leader Xi Jinping, the Olympics are a chance to show the world his country’s unity and confidence under his leadership.

“Nothing is too expensive for China’s international image, prestige and face, as the Chinese would say,” said Jean-Pierre Cabestan, a political scientist at Hong Kong Baptist University.

With China’s economy already slowing, global growth prospects clouded, and concerns that the Omicron variant of the coronavirus would lead to further shutdowns and choking of global supply chains, Beijing has been cautious amid rising costs. Even Mr Xi acknowledged that the event needs streamlining, saying last year the aim is to hold a “simple, safe, great” event.

Virtually all Olympic Games in recent years have resulted in disputes over cost overruns. A study by the University of Oxford had found that the running costs of the Olympic Games held since 1960 were, on average, almost three times the original bids of the host cities.

The city of Sochi, Russia, which hosted the 2014 Winter Olympics, spent and invested more than $50 billion — half of it in infrastructure. When Beijing hosted the 2008 Summer Olympics, it said it spent $6.8 billion, but that didn’t include the tens of billions more it spent on building roads, stadiums, subway lines and an airport terminal.

This time, China has set a budget of about $3 billion, a number that includes the construction of competition venues but excludes projects like a $1 billion high-speed rail line and a $5 billion expressway.

The pandemic makes the games even more expensive. The bill for last summer’s Tokyo Olympics included $2.8 billion in coronavirus prevention costs alone. China’s “zero Covid” strategy, which focuses on eradicating outbreaks, has meant infection control measures are much more elaborate.

China’s concerns about the pandemic have dashed hopes the games would attract tourists. Organizers said last fall they would not sell tickets to foreign viewers. Then last month they announced that most Chinese residents would also not be traveling, prompting hotel managers in Beijing to slash last-minute high room rates they had set for February.

updated

May 14, 2022 1:05 PM ET

Despite these difficulties, Chinese authorities have insisted they have stayed within operating budget.

Officials said the lack of spectators meant fewer staff were needed at the games. China also saved money by canceling a welcoming ceremony for foreign visitors and shortening the relay to just three days, the Beijing organizing committee said in an emailed response to questions. Beijing was also able to reuse competition venues, a massive media center and other facilities built for the 2008 Summer Olympics.

At $3.1 billion, China’s operating budget is comparable to the average, inflation-adjusted cost of hosting previous Winter Olympics, according to Oxford University researchers.

“Judging by the cost of previous Winter Olympics, that should be enough to cover the costs, especially considering many of the facilities have already been built,” said one of the experts, Bent Flyvbjerg, Professor of Major Program Management at Oxford.

However, it is difficult to assess what part, if any, of the cost of coronavirus prevention will actually go into the budget, Flyvbjerg said. Chinese accounting is often opaque and there are many budgets in which health care expenditures can be counted, he said.

The government has also urged companies to shoulder a higher share of the cost of hosting the Games. Other previous Olympic Games host cities have invested heavily in building accommodation for athletes and journalists, as well as a media center. China has taken a different approach.

In Zhangjiakou, an area near Beijing where some competitions are held, Chinese authorities have temporarily taken over Malaysia’s Genting Secret Garden ski resort. The resort expanded its capacity from 380 to 3,800 rooms and apartments before China won its Olympic bid. Lim Chee Wah, the resort’s founder and co-owner, said in an interview that he hadn’t been told how much he would be compensated by the government for using the resort for most of the winter season, but that he was confident it would be fair.

“We said well, thanks, but we will negotiate how to make the compensation – that will be done later,” he said.

China also doesn’t count long-term infrastructure investments made in the years leading up to the Games.

The national government spent US$2 billion to build an expressway from northwest Beijing to Yanqing, where Olympic sliding and alpine skiing competitions are held, and another US$3.6 billion to extend the expressway to Taizicheng Valley, where where the ski areas are located.

Before Beijing won its bid to host the 2022 Olympics, the government began spending $8.4 billion on a high-speed rail line that would take travelers from Beijing to Inner Mongolia at speeds of up to 217 miles per hour. After winning the Olympics, Beijing added $1 billion to this project to build an additional segment that flakes off the main line and goes up the mountains to Taizicheng.

“The Chinese don’t count any of it — they say they built it anyway,” said Andrew Zimbalist, a Smith College professor who has published three books on the economics of the Olympics. “I wonder if they would do it anyway, and if they would do it anyway, why do they have to host the Olympics.”

Resort owners like Mr. Lim from Genting hope that the new infrastructure will help to develop the industry. When the resort expanded tenfold ahead of the Olympics, he said he was told that the national rail service would run 15 or 20 trains a day to the Taizicheng Valley.

In an email response to questions, China State Railways said it was operating 15 bullet trains a day in each direction when the line opened in late 2019. But just a month later, when the pandemic began, the schedule was drastically reduced to five trains on most days and an additional five on peak travel days.

China sees the Olympics as transforming Beijing, which gets just a foot of natural snow most winters, into a global winter sports destination.

“The success in opening the Winter Olympics has brought positive economic benefits and created new sources of growth for the local economy,” said Beijing City Chief Spokesman Xu Hejian.

Liu Yi and Li You contributed to the research.