The Olympic Games will generate enormous business opportunities and facilitate a major face-lift for China. However, some countries have experienced an economic recession after hosting the world's largest sports event. This phenomenon has been termed the "post-Olympics bubble." Where will China go after the Olympics? Professor Li Yining at Peking University speaks to People's Daily on this question and other related issues. Excerpts follow:

Post-Olympics bubble?

There is no lack of hotspots for post-Olympics investment in China. The country has maintained rapid and stable economic growth, ranging from 8 to 10 percent annually, over the last few years. This should be attributed to a multitude of factors. First, investment inertia plays an important role in promoting economic growth. Large projects cannot be completed in a single year. Once launched, ongoing investment is required. The huge investment by the government in infrastructure construction will push forward the economic growth of the country.

Second, China's private economy is growing rapidly.

Third, with the rising demands of urban and rural residents, China's domestic market is steadily expanding. Chinese household expenditures on housing, entertainment and tourism, education, health care and durable products, including motor vehicles, are expected to maintain an uptrend for some time.

Fourth, China now has to undertake large-scale renovations of fixed assets. Given stricter environmental requirements and the tough task of reducing the consumption of energy and resources, if enterprises are slow to update their equipment their competitiveness will decline and they risk being eliminated from the market. The continual fixed assets investment will drive economic growth.

Hi-tech industries are a new destination for investment. The "New Economy" combines technological innovation with the capital market. The evolution of the capital market will greatly promote the development of hi-tech industries. The development of new energy sources, biotechnology, new materials and electronic products will attract substantial investment, which, in return, will stimulate national economic growth. In short, China is not worried about a lack of new investment destinations, although Olympics-related demands will disappear after 2008.

Olympic influences

The Olympic Games is generating some very important business opportunities mainly in two sectors. The first is the building and renovation of competition venues and other facilities, where the latest scientific and technological achievements will be widely applied. This will eventually promote the technological progress of related industries. Even after the Olympic Games concludes, its influence on China's economic growth will remain.

The influence of the Olympics on the development of the modern service industry is even wider and more persistent. For example, China's banking sector has favorable opportunities to develop a number of new businesses before and during the Olympic Games, such as banking card services and sales of Olympic tickets and licensed merchandise made of precious metals. By offering and improving these services, local financial institutions can raise their overall service levels significantly. Insurance services will have the same opportunities and endeavor to innovate. In addition, the influence of the 2008 Olympic Games on IT, tourism, hotel and catering services will also be profound.

Employment challenge

As for enterprises engaged in the building of sports venues and traffic facilities, they will be able to take on new projects. With new technology and better skills gained through carrying out Olympics-related projects, their workers can find more job opportunities.

On the other hand, China currently is short of high-caliber professionals in terms of financial and IT services. Those who accumulate experiences during the Olympic Games will be able to stay in the industries after 2008.

The tourism, retail and catering industries are likely to experience a slump after 2008, which may decrease job opportunities in these sectors. However, while China's economy continues to grow, Beijing's status as a major tourist attraction will remain. In the long run, these industries will expand and create new jobs.

Sustained growth

In my opinion, there are five major obstacles-industrial monopolies, the almost stagnant transformation of the government's functions, slow increase of farmers' income, an insufficient supply of resources and environmental constraints. To remove these obstacles, we must deepen reforms.

Industrial monopolies must be broken to allow more private enterprises to enter areas that were once closed off to them. The government should complete altering its role as early as possible to serve enterprises best. To increase the income of farmers, China needs to concentrate on the reform of the urban-rural dual structure, promote and optimize the mobility of production factors in urban and rural areas, and increase investment in rural education, health care and social security. In order to address shortages of certain resources, China should give priority to the reform of the R&D system and encourage enterprises to invest more in innovation, so as to establish a multi-layer capital market system and alleviate the problem of an insufficient energy supply by developing new energy resources. To ease environmental constraints, the government should adopt a comprehensive assessment system and increase monitoring of environmental protection.