Last month was full of joy and expectation for the Chinese people. Not only did their Olympic athletes come home from Athens with a record 32 gold medals; their Olympic ambassadors also brought back the banner of the Games, to be raised over Beijing in 2008.
But there are vital economic lessons to be taken away from Athens. Many observers say it will be the first Games to post a net loss since Moscow, in 1980. After gorging on infrastructure and other expenditure, Athens organisers now admit to spending more than US$12 billion - seven to eight times the proposed budget, and more than double their wildest pre-Games estimates.
The Olympics has helped swell Greece's fiscal deficit to 4.7 per cent of its gross domestic product, way over the 3 per cent limit that Euro-zone members are allowed. History bodes further ill for Athens: the 1976 games saddled Montreal with a debt so heavy that its citizens needed more than two decades to repay it.
It has almost been forgotten that there is the possibility of losing money by hosting the Olympics, following the 1984 Los Angeles Games. The organisers there accomplished legendary financial success, reaping some US$355 million in profit.
All host countries since then have made financial gains, but Athens has put an end to that. It is natural that Beijing, still ebullient over its impressive haul of gold from Athens, is focusing its attention on how to further burnish its Olympic image four years from now. China's media, too, is inclined to talk mostly about Olympic business opportunities when discussing the financial impact of the Games. Nobody is talking about the challenge on finance.
Beijing's goals for 2008 should not only be to organise a splendid event, but also to set a clear profit target. Analysts point out that China is the only country, other than the United States, to boast a huge domestic advertising market for the Olympics. Even after the Games, China's giant market and strong economy should ensure that the athletic facilities become commercially self-sustainable, instead of turning into 'white elephants'. With abundant business opportunities and mature business models, we have all the more reason to demand a profitable Olympics. Under one condition, of course: that we should abide by the laws of the market. The imperatives of business should also be applied to our quest for Olympic medals. China's gold medal tally in Athens ranked second only to the US, a fact certain to fuel loftier ambitions for 2008. There is no denying that China's state-run sports regime, despite undergoing reforms, retains the basic framework of Soviet-style planning. And we still count on the Treasury to fund an army of elite athletes. In established market economies, however, commercial markets promote the development of the sports industry through organised athletics and popular recreation. From this, teams of superior athletes evolve, who compete internationally. There could not be a wider gap between the two systems.