Regardless or because(?) of market-based reforms, China seems to be falling into the winner's curse when it comes to the 2008 Olympics (originally incorrect). Evidence? From Reuters via today's Amusement Business News comes initial estimates of the cost for the 2008 Olympics in Beijing:

As of early June, China's total investment in five main Olympic venues had hit 30.7 billion yuan ($3.79 billion), with more than 12 billion yuan slated to go to the sites this year alone, the semi-official English version of the People's Daily said.

Organizers' estimates of the total bill for the 2008 Olympics have risen to $40 billion from $37 billion, with most of the money targeted for new roads and subway lines and efforts to improve the city's power grid and environment.

Almost 90 billion yuan ($11 billion) would be poured into 60 key construction projects this year, the People's Daily said.

Granted, China might be going a little over-the-top in the construction projects, perhaps leaning more towards national pride than practicality. The $40 billion comes out to thirty to forty dollars per capita, which is a bit better than the one hundred to three hundred per capita Greece spent last year (depending on the number you wish to believe). Yet, while China has a much smaller per-capita income, they are spending close to 0.72% of per-capita income on the games, whereas Greece had per-capita spending of about 0.43% of per-capita income (statistically different?).

However, the economic impact to Beijing is likely to be less than $40 billion - if a million visitors showed up that would amount to $3000 to $4000 per capita (depending on your candidate for the much-abused multiplier effect). That sounds high to me. Evidently, Beijing is putting a lot of emphasis on national identity and perhaps the hopes of future development (which is likely to happen with or without the Olympics).

The Olympics are becoming even more of a white elephant than they were in the past - remember Montreal. The venues in Athens are already not being used because of depreciated structural integrity and lack of demand. At least Atlanta turned their Olympic stadium into The Ted.