Olympics to turn investors on or off China?

Font Size

Print

Feedback

Email

Discuss

Related Articles

US crisis to hit China: WenAfter Olympics, China faces big economic hurdles'China economy not to face post-Olympic blues'Olympics to turn investors on or off China?

Beijing, August 7: : The Olympic Games that start in Beijing on Friday will probably only enhance China's attractiveness as an investment destination, but there is still plenty that could go wrong to chill sentiment.

Looking to showcase the country's economic achievements, authorities have pulled out all the stops, spending tens of billions of dollars to build infrastructure and clean up the capital's air.

However, a grenade attack which killed 16 policemen in the remote northwest on Monday and protests in Beijing this week have underscored the risk of a turn of events that could spoil the business environment down the road.

"There are already a lot of negative impressions out there, so I think for a lot of visitors and a lot of people seeing what's going to be broadcast that there could be some positive changes," said William Hess, greater China manager for Global Insight in Beijing.

But Hess and other analysts pointed to a number of scenarios that could make things more difficult for companies doing business in China.

For one, should protests against China's policies towards Tibet or human rights spark a serious nationalist backlash, broadcast into living rooms around the world, protectionist voices in Washington and Brussels could gain force.

"I think that kind of imagery would feed those who would be more in the 'red-scare' camp already, so maybe it would help to harden some perceptions of China's rise," Hess said.

Andy Rothman, a strategist with CLSA in Shanghai, said he was primarily concerned about whether authorities would deal with protests in a heavy-handed way.

"Mass arrests that do not result in injuries are likely to have a more subtle, longer-term impact: making it more difficult for mainland companies and the Chinese government's new sovereign fund to invest overseas (and) damaging the image of goods made in China," he wrote in a research report.

Most analysts consider it unlikely, but a serious security incident would probably have long-term implications on the ease of doing business in China.

"If there's a bomb or something serious that goes wrong, I'm afraid they'll just tighten up security like crazy and there will be a lot of negative fallout from that for quite a long time," said Ian Stones, a long-time China-based businessman and adviser to the Conference Board.

Should such an attack occur, Stones said China might retain the tighter restrictions on visas it introduced for the Games.

"If security gets so tight, it would definitely slow business down," he said.