Like millions of other people across the world, I watched the Olympics opening ceremony on Friday, and I can say that it was quite a spectacle. While it certainly was an amazing show, the likes of which I have never seen before from an opening ceremony, the price tag for this show made me choke. When the announcer said that China had spent $300 million on just this one show I was shocked. I knew they had spent $40 billion on the whole Olympics, but most of that went to infrastructure improvements and pollution cleanup. $300 million for a show just seems ridiculous.

To me, this just proves the point that China is trying to use these games to show the world that they are now a power to be reckoned with. What better way to do that than throw down $40 billion for the Olympics and $300 million for the opening show, both of which are unprecedented numbers.

The problem with this is that the world already knows China is now a powerhouse. We all know about the growth in their economy, and pretty much every country in the world wants a piece of China right now. They don’t need to prove a point that has already been made. While in one sense the employment created by all this spending is a good thing for China, one can’t help but feel the money could have been put to better use. China still has a lot of poverty in their country as well as many other areas of need, which could have greatly used some of these funds set aside for the Olympics. I don’t think there is any chance of China seeing a return on the money they have spent in the form of increased tourism (or anything else for that matter) after the Games, so really, most of this money will have been wasted on what the country considers a big party for themselves.

The Olympics is a great event with loads of history and tradition, but when countries start using it to make statements or impress the world (and to be fair, China is not the first, nor will they be the last to use the Olympics in this way) it is just a shame. Countries shouldn’t neglect the good of their people for the sake of a game. The Olympics bring in a large sum of money and countries should be smart and spend only on the Olympics what they can expect to see in return, anything beyond that is just a waste.

Labels: China, economy, international

With China’s Olympic Games coming next month I thought it would be fitting to look at the cost they have paid, and compare that to the potential rewards which come from hosting this prestigious event. There has been a debate for sometime about whether or not hosting the Olympic Games is good or bad for the city’s economy, and this year’s games are no different. Beijing will spend an estimated $42 billion on the Olympic Games, according to the Wall Street Journal, a number that far surpasses any other city’s previous commitment, but will they receive value from this investment?

Sure, $42 billion is a ridiculous number to think about, and on the surface one could say that there was no way the Olympics could generate that much money for a city. However, we must also consider what that $42 billion went towards. A good majority of these funds went towards infrastructure improvements, as well as environmental cleanup. In the rapidly growing economy of China, infrastructure is in high demand, and many of these improvements were badly needed. The bigger question is whether they got a little too extravagant with the improvements, and whether those additional funds could have been put to better use elsewhere. Not all of the improvements have been of the extravagant type, however; in some cases, residential areas now feature streets lined with port-a-potties.

In addition, the almost $10.5 billion spent on environmental cleanup--while not providing immediate economic benefits, per se--is hard to argue with. I’ve heard horror stories about the pollution in Beijing, as I’m sure most people have. In fact, the pollution is so bad that many Olympic athletes will be staying in South Korea or Japan and flying in solely for their events. So the fact that the government is finally trying to clean it up is probably a good thing. Now, if they can just keep the pollution under control once the Games are over, that would be the next step.

On the other hand, some of that $42 billion has seemingly been spent on extravagances and items which will be of little lasting value. For example, there really aren’t any plans for the bird's nest stadium after the Games, and it doesn’t offer protection from Beijing’s harsh winters and hot, rainy summers, according to the Wall Street Journal. If we want to see how the Olympic Games can adversely affect a city’s economy, we need to look no further than Athens. The $15 billion Athens spent readying itself for the last Olympic Games--ranging from building a light rail system to kenneling all the city's stray dogs for the duration of the event--sent the city into debt, and they have yet to recover. In addition, according to Tourism-Review, the Olympic Games don’t always result in increased tourism. They point out that during the Barcelona and Sydney games, for example, while they did see Olympic Games-specific tourism, the regular tourists stayed home. They ended up in the same place, tourism-wise, as they would have been without the games.

Increased tourism to China is unlikely, as the country is making it more difficult to obtain visas to visit the country. Many people who have already purchased tickets to the Olympics will not be able to attend because the country won't allow them in. Further, the city will be shutting down shops and restaurants that are near Olympic venues because they don't want crowds to form. The city is so paranoid about crowds that, on the 11th day of each month, the city's residents practice lining up (this is done on the 11th because the number 11 looks like two people standing in line).

When all is said and done, I think on the books, at least, this spending spree in Beijing will appear to be a loser. I also think that China knows this, but is willing to put up with a loss on paper in order to cement their image across the globe. They want to be seen as a modern world power, and what better stage on which to make this statement than the Olympics? They are being smart with a lot of the budget, putting it towards things such as infrastructure, however at the same time, they are building this infrastructure in a manner that is probably not the best long-term. One example of this is that they build brick buildings quickly and cheaply, then encase them in glass so that they look modern. They are being a tad more extravagant then they really need to be, and the infrastructure they are building is likely being maximized for Olympic venues. China is a growing world power; they know it, and they want the world to know it. The Olympic Games will likely prove this point, and for that, China is willing to waste a few billion dollars.

Labels: China, international, tourism

For years the rift between Taiwan and mainland China has grown as the Chinese government asserted ownership of Taiwan and Taiwan called for independence. The Taiwanese government took a hard-line stance and heavily restricted travel and immigration from the mainland out of fear of sabotage or attack, but this has affected trade. Taiwan is now unable to compete with mainland China and other lower cost countries on several exports, and the economy in Taiwan, which was very healthy only a few years ago, is starting to suffer. For this reason, many residents of Taiwan were calling for change from their leadership.

Well, change is on the way. The people of Taiwan have elected Ma Ying-jeou as their new president. Ma is of the opposition party and favors closer relations with mainland China. According to an article in the International Tribune, Ma said in an interview yesterday that, in his first 100 days in office, he hoped to have an immediate effect on the economy by opening up Taiwan to mainland Chinese tourism. After that, Ma has other plans on how to better incorporate mainland China into Taiwan’s economy.

The former leading party of Taiwan, the Democratic Progressive Party, thinks closer relations with China will only result in disaster. If Taiwan can successfully reintegrate China into their economy without major disruption, then Taiwan’s economy should experience a nice surge. If the Democratic Progressive Party is correct in their conspiracy claims against China, and the situation turns ugly, then Taiwan may decline further.

Investors who think that Taiwan and China will live harmoniously should buy into Taiwan now. Taiwan’s tourism sector especially is in for a boost. As an indication of how investors are thinking, Taiwan’s stock market saw a 4 percent jump today in response to the election results. One should remember that certain Chinese leaders deeply despise Taiwan, and not discount the risks in this relationship. The Chinese seem to support Ma, so hopefully the two sides will be able to resolve the issues between them in a peaceful manner.

Labels: China, international

Many of our readers are interested in purchasing foreign investment property for various reasons. Some want to purchase foreign investment property as a vacation retreat, while others look at foreign property strictly as an investment and an alternative to U.S. real estate. If you are looking at vacation spots, then you should be concerned with more than the yield of a property. However, if you are buying foreign property solely as an investment, then yields will be one of the most important factors of the property you decide to buy.

Global Property Guide has published a list of the top 10 highest yielding foreign markets which might help you in your search for that perfect location. They identified the top 10 highest yielding foreign markets as: Egypt, Indonesia, Philippines, Panama, Ukraine, UAE, Jordan, China, South Africa, and Morocco.

Before you get too excited, consider that these figures are only based on highest yield. The rankings do not take into account the risks, taxes and fees associated with buying, selling and owning property in the country. One needs to analyze and account for these things before one buys property in a foreign country. Global Property Guide covers many different countries and offers additional information, including tax rates. They are a great place to start your research for foreign investment property.

Labels: China, Egypt, Indonesia, international, Jordan, Morocco, Panama, Philippines, real estate, South Africa, UAE, Ukraine