Playing Games and Leveraging on Land: Unfolding the Beijing Olympics and China’s Mega-event Urbanization Model

Abstract

While global commentators hail the unprecedented success of the Beijing Olympic Games, few have commented on the methods employed to promote urban development in China. This article develops a conceptual framework to unfold the Beijing Olympics and China’s mega-event urbanization model, which feature ‘playing games for leveraging land’. Literally, this informally translates to ‘concept creation’ and ‘land and finance leverage paradigm’. Based on a detailed investigation of the way China has dealt with mega-events such as the Olympics and the Asian Games, this article begins with an analysis on the well-known Chinese ‘land and leveraged finance’ model. However, it goes a step further to reveal a much bigger picture and brings to light the deeper underlying logic behind China’s ‘mega-event urbanization model’ as well as its legacy and consequence. It unfolds the intriguing relations between central and local governments; between functional/institutional systems (land, taxation and banking) in regard to territory and space; and between economic and political dynamics (local competition for both economic/GDP growth and individual political aspirations). This development model is unique to China and extraordinarily unconventional on a global scale which is unparalleled by any past experiences in other countries that have hosted the Olympic Games and other similar events. The ramifications of such ambitious and untested strategies could yield negative impacts on China’s long-term development and harm the world economy in the global scale.

Acknowledgements

This article results from an invited presentation at the Brazilian Ministry of Sports entitled, ‘The Beijing Olympics—Impacts on Economic and Urban Development’ at the International Workshop ‘The BRICS and Sports Mega-Events’ held at BRICS Policy Center from 7–9 Dec 2012 in Rio de Janeiro, Brazil. The authors would like to thank the Brazilian Ministry of Sports, the Research Grants Council of the HKSAR China Theme-Based Research Scheme grant [Project Number T31/717/12R], HKU Strategic Research Theme on China Business and Economics [Project Number 102009286] for partial financial support. The authors would also like to thank Dr Liu Zhi, Director of Peking University—Lincoln Institute Center for Urban Development and Land Policy, Professor Christopher Smith at the University at Albany, and two anonymous reviewers for their valuable and constructive comments. Naturally, the authors hold responsibility for errors and omission in the final article.

Notes

¹ Robert A. Baade, ‘Professional sports as catalysts for metropolitan economic development’, Journal of Urban Affairs 18(1), (1996), pp. 1–17.

² Greg Andranovich, Matthew J. Burbank, and Charles H. Heying, ‘Olympic cities: lessons learned from mega-event politics’, Journal of Urban Affairs 23(2), (2001), pp. 113–131; Richard Cashman, Impact of the Games on Olympic host cities (Barcelona: Centre d'Estudis Olimpics, 2002); John R. Gold and Margaret M. Gold, ‘Olympic cities: regeneration, city rebranding and changing urban agendas’, Geography Compass 2(1), (2008), pp. 300–318; Qu Lei and Marjolein Spaans, ‘The mega-event as a strategy in spatial planning: starting from the Olympic city of Barcelona’ (paper presented at the 4th International Conference of the International Forum on Urbanism (IFoU): The New Urban Question, Urbanism beyond Neo-Liberalism, Amsterdam, Netherlands, November 26–28, 2009); Li Zhang and Xiaobin Zhao, ‘City branding and the Olympic effect: a case study of Beijing’, The International Journal of Urban Policy and Planning 26(5), (2009), pp. 245–254.

³ Brian S. Chalkley and Stephen J. Essex, ‘Urban development through hosting international events: a history of the Olympic Games’, Planning Perspectives 14(4), (1999), pp. 369–394.

⁴ Michael Barke, ‘Mexico City’, in John R. Gold and Margaret M. Gold, eds. Olympic Cities: City Agendas, Planning, and the World's Games, 1896 to 2012 (New York: Routledge, 2006), pp. 183–196.

⁵ Preuss Holger, The Economics of Staging the Olympics (Northampton: Edward Elgar, 2004).

⁶ Ibid.

⁷ Ibid.

⁸ Stephen Essex and Brian Chalkley, Urban Transformation From Hosting the Olympic Games (Barcelona: Centre d’Estudis Olímpics [UAB], 2003).

⁹ Hanwen Liao and Adrian Pitts, ‘A brief historical review of Olympic urbanization’, The International Journal of the History of Sport 23(7), (2006), pp. 1232–1252.

¹⁰ John R. Gold and Margaret M. Gold, ‘Olympic cities: regeneration, city rebranding and changing urban agendas’, pp. 300–318.

¹¹ Ibid.

¹² Amedeo R. Odoni, ‘Athens International Airport: a case study’, (2007), available at: http://ardent.mit.edu/airports/ASP_current_lectures/ASP%2007/Athens%2007%20v2.pdf (accessed 15 December 2015).

¹³ G. Tziralis, A. Tolis, I. Tatsiopoulos and K. Aravossis, ‘Economic aspects and sustainability impact of the Athens 2004 Olympic Games’, in K. Aravossis, C. A. Brebbia , E. Kakaras and A. G. Kungolos, eds. Environmental Economics and Investment Assessment, (Southampton: WIT Press, 2006), pp. 21–33.

¹⁴ Harry H. Hiller, ‘Mega-events, urban boosterism and growth strategies: an analysis of the objectives and legitimations of the Cape Town 2004 Olympic bid’, International Journal of Urban and Regional Research 24(2), (2000), pp. 449–458 and Host cities and the Olympics: An Interactionist Approach (Oxford: Routledge, 2012).

¹⁵ Ibid.

¹⁶ Ryan Ong, ‘New Beijing, Great Olympics: Beijing and its unfolding Olympic legacy’, Stanford Journal of East Asian Affairs 4(2), (2004), pp. 35–49; Anne-marie Broudehoux, ‘Spectacular Beijing: the conspicuous construction of an Olympic metropolis’, Journal of Urban Affairs 29(4), (2007), pp. 383–399; John R. Gold and Margaret M. Gold, eds, ‘From A to B: The Summer Olympics, 1896–2008’, in Olympic Cities: City Agendads, Planning and the World's Games (New York: Routledge, 2008), pp. 17–55; Zhang and Zhao, ‘City branding and the Olympic effect: A case study of Beijing’; Laurence Liauw, ‘Urbanization of post-Olympic Beijing’, in Sustain and Develop, ed. Joshua Bolchover and Jonathan D. Solomon (New York: Wakefield Press, 2009), pp. 215–221; Xuefei Ren, ‘“Green” as Spectacle in China’, Journal of International Affairs 65(2), (2012), 19–30.

¹⁷ Gold and Gold, ‘Olympic cities: regeneration, city rebranding and changing urban agendas’; Preuss, The Economics of Staging the Olympics.

¹⁸ Ong, ‘New Beijing, Great Olympics: Beijing and its unfolding Olympic legacy’.

¹⁹ Zhang and Zhao, ‘City branding and the Olympic effect: a case study of Beijing’.

²⁰ Xuefei Ren, ‘Architecture and nation building in the age of globalization: construction of the National Stadium of Beijing for the 2008 Olympics’, Journal of Urban Affairs 30(2), (2008), pp. 175–190 and ‘“Green” as Spectacle in China’.

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²² Guangzhong Cao, Changchun Feng, Ran Tao, ‘Local “land finance” in China's urban expansion: challenges and solutions’, China & World Economy 16(2), (2008), pp. 19–30; You-tien Hsing, The Great Urban Transformation: Politics of Land and Property in China (Oxford: Oxford University Press, 2010); Hui Wang, Juer Tong, Fubing Su, Guoxue Wei, and Ran Tao, ‘To reallocate or not: reconsidering the dilemma in China's agricultural land tenure policy’, Land Use Policy 28(4), (2011), pp. 805–814; Xiulin Sun and Feizhou Zhou, ‘Tǔdì Cáizhèng Yǔ Fēn Shuìzhì: Yígè Shízhèng Jiěshì’ [‘Land finance and the tax-sharing system: an empirical explanation’], Zhōngguó Shèhuìkēxué [Social Sciences in China] 4, (2013), pp. 40–59; Rong Tao and Tianxiao Zhou, ‘Decentralization in a centralized system: project-based governance for land-related public goods provision in China’, Land Use Policy 47, (2015), pp. 262–272; Meg Rithmire, ‘Land politics and local state capacities: the political economy of urban change in China’, The China Quarterly 216, (2013), pp. 872–895.

²³ Kai Yuen Tsui, ‘China's infrastructure investment boom and local debt crisis’, Eurasian Geography and Economics 52(5), (2011), pp. 686–711.

²⁴ International Olympic Committee, Candidature acceptance procedure Games of the XXIX Olympiad 2008 (Lausanne, Switzerland: IOC Candidature Acceptance Working Group, 2000).

²⁵ Beijing Foreign Affairs Office, ‘Development of Olympic venues and related facilities’ (2013), available at: http://www.ebeijing.gov.cn/Government/Mayor_office/Mayor_bulletin/t929892.htm (accessed 15 December 2015); The Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG), ‘Olympic venue distribution’ (2008), available at: http://en.beijing2008.cn/venues/ (accessed 15 December 2015).

²⁶ Foreign Affairs Office of Chaoyang District, Beijing, ‘A sketch of Chaoyang’ (2006), available at: http://bci.bjchy.gov.cn/chaoyang/sketch/ (accessed 15 December 2015).

²⁷ Tania Branigan, ‘London 2012: legacy of Beijing is that Bird's Nest will take 30 years to pay off’ (2012), available at: http://www.guardian.co.uk/sport/london-2012-olympics-blog/2012/jul/26/2008-olympics-birds-nest-beijing (accessed 15 December 2015); Broudehoux, ‘Spectacular Beijing: the conspicuous construction of an Olympic’; Ong, ‘New Beijing, great Olympics: Beijing and its unfolding Olympic legacy’.

²⁸ Beijing Foreign Affairs Office, ‘Development of Olympic venues and related facilities’; Broudehoux, ‘Spectacular Beijing: the conspicuous construction of an Olympic’; Gold and Gold, ‘From A to B: the summer Olympics’; Liauw, ‘Urbanization of post-Olympic Beijing’.

²⁹ China National Audit Office, ‘Běijīng Àoyùnhuì Cáiwù Shōuzhī Hé Àoyùn Chǎngguǎn Jiànshè Xiàngmù Gēnzōng Shěnjì Jiēguǒ’ [‘Financial revenue and expenditure of the Beijing Olympic Games and the Olympic venues construction project tracking audit results announcement’].

³⁰ Beijing Traffic Management Bureau, ‘Beijing Transport Subway’ (2010), available at: http://www.bjjtgl.gov.cn/publish/portal1/Tab175/ (accessed 15 December 2015).

³¹ Ibid.

³² CAPA Centre for Aviation, ‘Beijing Capital- now the third largest airport in the world’, (2010), available at: http://centreforaviation.com/analysis/beijing-capital--now-the-third-largest-airport-in-the-world-shanghai-and-guangzhou-also-key-hubs-23744 (accessed 15 December 2015).

³³ China National Audit Office, ‘Běijīng Àoyùnhuì Cáiwù Shōuzhī Hé Àoyùn Chǎngguǎn Jiànshè Xiàngmù Gēnzōng Shěnjì Jiēguǒ’ [‘Financial revenue and expenditure of the Beijing Olympic Games and the Olympic venues construction project tracking audit results announcement’], (19 June 2009), available at: http://www.audit.gov.cn/n1992130/n1992150/n1992500/2302152.html (accessed 15 December 2015).

³⁴ See Tables 1 and 2 and Figure 3.

³⁵ Norton Rose Australia, ‘China: ownership of land in China’ (27 November 2009), available at: http://www.mondaq.com/x/89998/agriculture+land+law/Ownership+Of+Land+In+China (accessed 15 December 2015); Wang et al., ‘To reallocate or not: reconsidering the dilemma in China's agricultural land tenure policy’.

³⁶ See Figure 3.

³⁷ See the second and last column of Table 3.

³⁸ Ibid.

³⁹ Chinese Olympic Committee, ‘16th Asian Games: Guangzhou 2010’ (11 February 2011), available at: http://en.olympic.cn/games/asian/2011-02-11/2125066.html (accessed 15 December 2015).

⁴⁰ See Figure 6; Chinese Olympic Committee, ‘16th Asian Games: Guangzhou 2010’.

⁴¹ See Figure 7.

⁴² Quanlin Qiu, ‘Guangzhou tempers GDP target’, China Daily USA (22 February 2011), available at: http://usa.chinadaily.com.cn/epaper/2011-02/22/content_12056588.htm (accessed 15 December 2015).

⁴³ See Figure 8.

⁴⁴ See Figure 9.

⁴⁵ See Figure 10.

⁴⁶ Cao et al., ‘Local “land finance” in China's urban expansion: challenges and solutions’; Tao et al., ‘Land leasing and local public finance in China's regional development: evidence from prefecture-level cities’.

⁴⁷ You-tien Hsing, ‘Land and territorial politics in urban China’, The China Quarterly 187, (2006), pp. 575–591; Rithmire, ‘Land politics and local state capacities: the political economy of urban change in China’; Tao and Zhou, ‘Decentralization in a centralized system: project-based governance for land-related public goods provision in China’.

⁴⁸ Xiaobin Zhao and Li Zhang, ‘Decentralized Reforms and Regionalism in China’, International Regional Science Review 22(3), (1999), pp. 251–281.

⁴⁹ Zhou, ‘Property rights and land requisition system: a critical choice for China's urbanization’; George C.S. Lin, ‘China's landed urbanization: neoliberalizing politics, land commodification, and municipal finance in the growth of metropolises’, Environment and Planning A 46(8), (2014), pp. 1814–1835; Tsui, ‘China's infrastructure investment boom and local debt crisis’.

⁵⁰ Koon Kwai Wong and Xiaobin Zhao, ‘The influence of bureaucratic behavior on land apportionment in China’, Environment and Planning C 17(1), (1999), pp. 113–126; Wu, ‘How neoliberal is China's reform? The origins of change during transition’; Tsui, ‘China's infrastructure investment boom and local debt crisis’; Sun and Zhou, ‘Tǔdì Cáizhèng Yǔ Fēn Shuìzhì: Yígè Shízhèng Jiěshì’ [‘Land finance and the tax-sharing system: an empirical explanation’].

⁵¹ De Wang, Li Zhang, Zhao Zhang, Simon Xiaobin Zhao, ‘Urban infrastructure financing in reform-era China’, Urban Studies 48(14), (2011), pp. 1–24; Tao et al., ‘Land leasing and local public finance in China's regional development: evidence from prefecture-level cities’; Zhan, ‘From local state corporatism to land revenue regime: urbanization and the recent transition of rural industry in China’.

⁵² Hsing, ‘Land and territorial politics in urban China’; Hua, Chengshi Hua Zhuanxing Yu Tudi Xianjing [Urbanization and Land Transformation Trap].

⁵³ Rithmire, ‘Land politics and local state capacities: the political economy of urban change in China’.

⁵⁴ Tsui, ‘China's infrastructure investment boom and local debt crisis’; Zhao and Zhan, ‘Where does the role of Chinese government in land development stand in a global context: an international comparative study’;

⁵⁵ Cao et al., ‘Local “land finance” in China's urban expansion: challenges and solutions’.

⁵⁶ Hsing, The Great Urban Transformation: Politics of Land and Property in China; Tao et al., ‘Land leasing and local public finance in China's regional development: evidence from prefecture-level cities’; Tao and Zhou, ‘Decentralization in a centralized system: Project-based governance for land-related public goods provision in China’.

⁵⁷ Wang et al., ‘Urban infrastructure financing in reform-era China’.

⁵⁸ Cao et al., ‘Local “land finance” in China's urban expansion: challenges and solutions’; Rithmire, ‘Land politics and local state capacities: the political economy of urban change in China’.

⁵⁹ As Table 3 shows.

⁶⁰ The Sino-CITIC Group (CITIC Group), Beijing Urban Construction Group, County An Yuejiang Limited (Hong Kong), and the United States Golden State Holding Group formed the Common Wealth Group (CITIC United Corporation) which contributed 42% of initial stadium construction costs. The Beijing State-Owned Assets Management Co. Ltd. paid the remaining 58%. The two sides, according to the ratio of investment, set up the National Stadium Limited, which was fully responsible for the financing, construction, and management of the Bird’s Nest. Under the official contract, the CITIC Commonwealth would self-finance the franchise for 30 years post-Games. After contract expiry, the Bird’s Nest was scheduled to be recovered by the Beijing Municipal Government. In 2009, the Beijing Municipal Government recovered the right to operate due to the CITIC United Corporation’s financial inability to run the Bird’s Nest. Through a RMB10 billion loan from the Bank of Beijing, the municipal government repaid the funds for construction loans originally paid by the CITIC Commonwealth Group. The leading operators and the National Stadium Holding Company responsibilities for the operation and development of the Bird’s Nest were handed over to the Beijing State-Owned Assets Management GmbH and loans responsibility transferred to the National Stadium GmbH. Even though in 2009, Bird’s Nest operators’ gross income had reached RMB260 million, operators were unable to bear the financial burden of the original investment in the stadium, annual outstanding loan interests, venue depreciation, and an operating cost of RMB70 million. This also shows that the ‘Build-Operate-Transfer’ (BOT) mode in running these very expensive facilities failed.

⁶¹ Official website of National Audit office of the People’s Republic of China, ‘Shěnjìshǔ Fābù Quánguó Zhèngfǔ Xìng Zhàiwù Shěnjì Jiēguǒ’ [‘Audit Commission published the audit results of the national government debt’], Xinhuanet (30 December 2013), available at: http://news.xinhuanet.com/fortune/2013-12/30/c_125934620.htm (accessed 15 December 2015).

⁶² Larry Cao, ‘Insights on China’s growth, real estate market, and shadow banking’, Enterprising investor (18 August 2014), available at: https://blogs.cfainstitute.org/investor/2014/08/18/insights-on-chinas-growth-real-estate-market-and-shadow-banking/ (accessed 15 December 2015).

⁶³ Tsui, ‘China's infrastructure investment boom and local debt crisis’.

⁶⁴ See Note 63