The latest story in a series that studies the financial impact of the looming China Olympic Games.
By William Patalon III
Money Morning/The Money Map Report
This year's Summer Olympic Games are considered so crucial to China's future that Beijing is even taking steps to make sure the weather is perfect for August event's opening and closing ceremonies.
Yes, you heard that correctly – it's taking steps to guarantee perfect weather.
Viewing the Summer Games as a chance to showcase its progress to the world, and desperate to project the best possible image, China was already battling to bring inflation and pollution under control.
Now it's adding precipitation to that list.
If rain threatens the Aug. 8 opening ceremony or the Aug. 24th closing ceremony, Beijing officials say they will set up several banks of rocket launchers outside the city to "seed" the threatening thunderheads and cause them to release their deposit of water before over flying China's capital.
"We are now drafting the implementation plan for the artificial rain mitigation for the opening and closing ceremonies," Wang Yubin, a Beijing Meteorological Bureau engineer, told The Economic Times. "This is a very complex process, so we must select the right time and place."
The stakes are high. China is spending an estimated $40 billion just to overhaul the transportation system, utilities and other parts of Beijing's infrastructure. And clearly the global spotlight now focusing on China due to the Olympics was a big reason thatto clean up the air and water pollution that has marred its image and perhaps even impeded growth.
Although it's rare for Olympic hosts to realize a true post-games economic windfall, China is betting it will be an exception. Many experts are making the same bet. Although UBS AG (UBS) analysts say the Olympic games won't actually boost growth, they did say the role will help China sustain its economic growth rate at more than 12% from 2007 to 2010, and create nearly 750,000 new jobs from 2004 to 2009.
That's a pretty hefty impact, if you ask us.
Visa International said that consumers are confident the Olympic games will have a lasting economic benefit by sparking ongoing investment and generating tourism going forward.
In an October survey, three-quarters of those polled strongly agreed that the Olympics would bring great financial and economic benefit to China, up from 68% in July, while 72% said the games would leave visitors with a favorable view of the country, up from 66% in July.
Meranda Chan, Visa's country manager for Singapore and Brunei, said the findings "are excellent news for both China and its source markets for tourism. They tell us that people in China believe that the Beijing 2008 Olympic games is a worthwhile investment by the Chinese government, and they see that investment continuing to pay returns in the future."
But that means that a washout of the opening or closing ceremonies could be a financial wipeout for Beijing.
Enter the "Weather Modification" strategy.
About 24 countries worldwide currently have cloud-seeding programs. The largest program is the People's Republic of China, which believes that it increases the amount of rain over several of its increasingly arid regions – including the Beijing capital – by firing silver iodide rockets into the sky whenever precipitation is wanted. Silver iodide is thought to concentrate moisture and cause rain. China even has incidents of political wrangling caused by neighboring regions which accuse each other of "rain theft" through the use of cloud seeding.
In China, heavy weapons are used to launch pellets containing silver iodide into clouds. China has quite an investment, currently using more than 12,000 anti-aircraft guns and rocket launchers in addition to about 30 planes, according to HowStuffWorks.com. Chinese research into weather control began in 1958, when the practice was still in its early stages.
With the Olympics, the plan is to watch the weather patterns as the ceremonies approach, and then to watch the skies around Beijing. Indeed, Beijing has guaranteed clear skies for the event. They plan to track cloud formations and cause rain in the days leading up to the ceremonies If it looks as if rain is threatening, the government weather planners will seed the thunderheads in an effort to get them to drop their moisture before they reach the capital.
Experts greatly differ when handicapping China's chances for success.
Prof. Andy Detwiler, a professor of meteorology at the South Dakota School of Mines and Technology who edits the Journal of Weather Modification, told an interviewer that Beijing's weather-harnessing effort may not meet with much more success.
"It's the emperor and his new clothes sort of thing. Nobody wants to admit there is any uncertainty involved in the operation," Detwiler said. "The only nations I know of who claim that they can schedule the weather, clear skies for public events, prevent rain at big celebrations is the old Soviet Union and China."
For instance, on the very day Chinese weather modification experts were boasting of their plan at a news conference, the country's middle portion was hammered by the worst snowstorm in 50 years – one that Chinese meteorologists failed to predict.
According to The Economic Times, several calls to the China Meteorological Administration seeking interviews with weather modification officials to discuss the Olympics plans were greeted with the same reply: "This is a sensitive topic."
One junior staff member at the Beijing Meteorological Bureau said the subject was very guarded, "like Americans keeping their nuclear secrets."
Weather modification has a colorful history.
In the United States, cloud seeding is used to boost rainfall in drought-ridden regions, to reduce the size of hailstones that often form in thurderstorms, and to reduce the fog in and around airports. Ski resorts also use it to induce snowfall for weekend skiers. Eleven of the U.S. Western states and Canada's province of Alberta have ongoing rainfall programs.
At the Woodstock Festival in 1969, many people claimed U.S. military airplanes seeded the clouds – allegedly causing the rain that lasted throughout most of the festival. Wikipedia says that "this remains one of the many conspiracy theories put forth by members of the hippy movement at the time." And in July 2006, at the Group of Eight Summit, Russian President Vladimir Putin said air force jets were sent to seed incoming clouds so that they would drop their rain over Finland.
As it turns out, rain drenched the G8 summit.
News and Related Story Notes:
- The Economic Times: .
- International Herald Tribune:
Chinese stocks could benefit from Olympic effect.
- Official Web Site:
Beijing Summer Olympic Games.
- Money Morning Commentary:
Investors Will Clean Up From Beijing's Toxic Mess for Years to Come.
- Money Morning News Analysis:
Pepsi 'Goes Red' in China.
Can China control the weather?
- Time magazine:
- Visa-Asia.com Web Site:
Visa Survey Shows Strong Support for the Beijing Olympic Games Investment.
- Money Morning Investment Analysis
China's Nightmare Snowstorm Signals More Economic Expansion with Investment Opportunities Still to Come.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.