China reports financial win from Olympics

By Liu Xiaoyuan
Guest Commentary

Published: June 24, 2009

Fireworks explode over the “Bird’s Nest” National Stadium during the closing ceremonies for the 2008 Beijing Olympics on August 24, 2008, in Beijing, China. The government says it made US$146 million profit on the games. (UPI Photo/Mike Theiler)

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Beijing, China — China’s National Audit Office released its statement of revenues and expenditures for the 2008 Beijing Olympics on Saturday, reporting a net profit of 1 billion yuan (US$146 million).

I am not an expert in finance or auditing, but after reading through the entire published report on the official website, I noticed there were a number of missing items that should have been included in this audit. I’d like to point them out for the sake of discussion.

Starting from July 20 last year all construction projects in Beijing were suspended, and some 150 enterprises considered heavy polluters were requested to stop production for two months, according to media reports. Those most affected by this move were migrant workers and the construction companies.

A manager at one construction site told the press that stopping work would result in a loss of around 10,000 yuan (US$1,400) per day, adding that the government would later provide compensation for this loss.

Meanwhile the Beijing Shougang Company Ltd., China’s major steel company under the state-owned Shougang Group, was ordered to reduce its production by 70 percent during the Beijing Olympics period. The plant, which originally generated more than 660,000 tons of steel per month and was viewed as the biggest threat to the air in Beijing, had started to move its facilities out of the city to support the “Green Olympics” aimed at environmental protection.

The company’s management said that as a responsible state enterprise it was completely reasonable that it observe state policy. Besides, the government would be lowering the charges for disposing of its pollutants, Beijing Shougang told the media.

Except for workers’ wages, all losses due to the cessation of work and reduction of production would be compensated by the government, Chinese media reported. None of those expenses are found in the audit report, however.

Domestic group tours to Beijing were forbidden during the Beijing Games, too. As a lawyer, I was once consulted as to whether consumers could claim compensation when travel agencies broke their contracts.

In addition, the audit showed that the torch relay cost only 332 million yuan (US$48 mllion), including 20 million yuan (US$3 million) for the Paralympics, which was surprisingly low. Could this humble amount be enough for those grand relays?

The Olympic touches traveled through 116 cities and regions in the country, involving hundreds of torch bearers. They were carried 40 to 50 kilometers per day, taking 10 to 12 hours. Further, when the torches moved to the next city, provincial capital or autonomous region, they had to travel by plane, train or car. When the torches arrived at each place, magnificent ceremonies could not be avoided. Thus, I don’t think 332 million yuan would be enough for all those displays.

One sports official declared that just the expense of carrying the torches up Mount Everest was around 20 million yuan (US$3 million).

When the torches arrived in each city in China, the expenses for their reception were all paid for by local governments. Is this why those expenses were not listed as part of the expenditure for the games? They were all generated for the cause of the Olympics.

If these missing items were officially counted as expenses for the Beijing Olympics, then everyone would have a pretty good idea about China’s win or loss in the games.

(Liu Xiaoyuan is a lawyer based in Beijing and also an active blogger on legal issues. This article is translated and edited from the Chinese by UPI Asia.com; the original may be found at http://blog.sina.com.cn/s/blog_49daf0ea0100dtgh.html ©Copyright Liu Xiaoyuan.)