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Closure of factories will not hit economy
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Beijing's economic growth this year will not be significantly affected by its plans to temporarily shut down factories, reduce their production, and limit the use of cars to improve air quality during the Olympic Games, an official said Thursday.

Yu Xiuqin, deputy head of the Beijing municipal bureau of statistics, said the impact will not be great because many large factories had already been moved out of the city, and those forced to close temporarily, will be able to adjust.

"These factories anticipated (the shutdowns), and so they will be able to take appropriate measures. There will be some impact, but it will not be great," Yu said.

The city's environmental protection bureau said on Monday the municipal government will suspend or reduce production in 21 major heavy polluting factories during the period of the Olympics and Paralympics.

Beijing's GDP in the first quarter was to 214.8 billion yuan (US$30.6 billion), 11.3 percent higher than for the same period last year.

Yu declined to give an estimate as to how much the shutdown from July 20 to September 20 will cost the industrial sector. But she said the services sector makes up more than 70 percent of the city's economy, and the Olympics will further boost it.

Measures to limit factory production are also planned for neighboring Tianjin, Hebei, Inner Mongolia, Shanxi and Shandong, but details have yet to be released.

Although hosting the Olympics will make it more difficult for Beijing to control inflation, Yu said she was confident the government will be able to keep prices under control.

"Consumer prices will go up during the Olympics, but that's a normal phenomenon. No host country can avoid it," Yu said.

"Food prices are going up and spreading to other sectors and products, plus there's the Olympics factor - we really can't be overly optimistic."

Consumer prices in Beijing were up 6 percent in the first quarter compared to 0.9 percent for the same period last year, driven mainly by soaring food prices.

Yu said she was surprised that hotel room rates had risen only 10 percent on average in the run-up to the Games, much less than she had feared.

Yu said the Olympics had contributed an average of less than 1.7 percentage points to the city's annual economic growth over the seven years since it won the bid.

She said she did not expect Beijing's economy to see a big slowdown after the Olympics, in part because there were plans in hand to start construction on 11 satellite cities.

"This will not only help boost investment, it will also draw people to the city and stimulate consumption," she said.

(China Daily April 18, 2008)

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