Editor’s Note: A version of this story appeared in CNN’s Meanwhile in China newsletter, a three-times-a-week update exploring what you need to know about the country’s rise and how it impacts the world. Sign up here.
With the Olympic flame extinguished in Tokyo, all eyes are now on Beijing for the 2022 Winter Games less than six months away.
Scheduled to take place from February 4 to 20, the Winter Games is seen as a major moment of pride in China, with Beijing poised to become the world’s first city to host both the Summer and Winter Olympics.
But it’s also shaping up to be the most controversial Olympics in recent years, as calls grow for a diplomatic boycott over Beijing’s alleged human rights abuses against the Uyghur Muslims in the western region of Xinjiang.
In addition, the build up to the event will be set against the backdrop of a worsening pandemic and lingering questions over Beijing’s alleged mishandling of the initial outbreak.
For China, pulling off the Olympics safely and successfully will be a key testimony to its national strength and global standing, as the ruling Communist Party enters into its second century amid what it sees an increasingly “hostile” international environment.
Having successfully contained the spread of the virus, China is now grappling with its worst outbreak in more than a year, with the highly contagious Delta variant spreading to half of its provinces. The last thing Chinese leaders will want to see is the Winter Olympics turning into a superspreader event.
Speaking to CNN, Jin Dongyan, a virologist at the University of Hong Kong, said the success of the Tokyo Olympics shows that with careful planning and strict safety measures, holding an international sports event during the pandemic is “completely feasible.”
The 2022 Winter Games will be spread over three main areas — in the capital Beijing, as well as Yanqing and Zhangjiakou to its northwest — connected by high-speed rail.
Jin suggested Beijing could draw on the experience of the Tokyo organizers, in creating a bubble around the key Olympic sites, to prevent Covid-19 from spreading.
During the Olympics, Tokyo was under a state of emergency and reporting thousands of cases every day. But inside the Olympic bubble, only a small number of people were infected — with about 400 Games-related cases recorded since July 1.
But while the Tokyo Games went to great lengths to protect athletes from catching Covid-19, Beijing will likely want to prevent the coronavirus from spreading outwards, from the Olympic bubble into local communities.
For more than a year, China has relied on a harsh “zero tolerance” strategy to swiftly stamp out domestic flare-ups. It has also closed its borders to most foreigners. Those few who are allowed to enter are required to undergo two to three weeks of mandatory hotel quarantine.
The reopening for the country’s borders for the first time in two years, even in a limited capacity, will therefore pose a massive logistical challenge, not least in terms of housing the athletes.
Jin, the expert at Hong Kong University, said the current lengthy quarantine requirement was unsustainable for the Olympics, as few athletes would be willing to be trapped in a hotel room for three weeks prior to their events.
There is also the uncertainty of live audiences. The Tokyo Games banned foreign as well as local spectators. But the International Olympic Committee said last month the Beijing Games would need spectators to be successful.
“We need and we want to have spectators … We want to have the opportunity for everybody to enjoy the hospitality and enjoy the great Chinese offers,” said Juan Antonio Samaranch Jr., head of the IOC’s coordination commission.
Last week, an expert at the Chinese Center for Disease Control and Prevention told the state-run Global Times many events at the Beijing Winter Games will be held outdoors, making it possible for domestic audiences to attend, though it is not clear if spectators will be subject to additional quarantine measures.
If Beijing does allow domestic spectators, will they too be required to live temporarily within the Olympic bubble – and how might Beijing facilitate sealing off tens of thousands of people, potentially for several weeks?
Despite the significant uncertainty surrounding such questions, public anticipation for the Winter Games is already running high in China. During the closing ceremony of the Tokyo Games on Sunday, hashtags about the Beijing Olympics were among the top trending topics on Weibo, China’s strictly censored version of Twitter, drawing hundreds of millions of views.
“The stadiums are so high-end and magnificent. Hope the pandemic ends soon so that I can go to see the game in person,” one comment said.
“Covid-19 will become like flu in the future and we can’t always close the country’s gate. China hasn’t hosted a winter Olympics and this is a particularly precious opportunity to show our comprehensive national strength,” read another.
Others, however, are concerned about the spread of Covid-19 through the Games, as well as the strict travel restrictions that are likely to be put in place.
“Have we forgotten how many of our countrymen died because of Covid-19? Why do we have to take on the risk for the whole country? There will be all kinds of restrictions going into Beijing…how many working-class people will have their lives affected?” one commentator wrote.
Partly as a result of the “zero Covid” strategy, China’s public tolerance towards infections remains extremely low. In recent weeks, some prominent Chinese public health experts have called for a switch of approach for the country to learn to coexist with the coronavirus, following the path increasingly taken by other countries with relatively high vaccination rates.
On Sunday, however, China’s former health minister published a commentary in party mouthpiece People’s Daily attacking the idea of “coexisting with the virus,” potentially suggesting official resistance to the approach.
In the article, Gao Qiang, the former minister, accused the United States and the United Kingdom of “disregarding people’s health and safety” and causing a resurgence of outbreaks by relaxing Covid restrictions.
“This is a failure of epidemic prevention decision making caused by the defects in the political systems of countries like the US and the UK, as well as an inevitable result of their promotion of individualistic values,” wrote Gao.
Photo of the Day
A new 88,000-square-meter (947,224-square-foot) terminal opened at Lhasa Gonggar Airport in Tibet on Saturday. The airport is Tibet’s largest aviation hub, as well as one of the highest airports in the world. The new terminal is expected to “significantly boost passenger and cargo transport” and help the vast Himalayan region become a “global logistics hub for South Asia,” the state-owned Global Times reported.
The risky loophole Chinese companies have been using for years
The Didi IPO debacle is shining a spotlight on a complicated investing structure used by many Chinese companies that list in the United States.
The concept is called a variable interest entity, or VIE, and it’s popular among Chinese firms that want to raise money from foreign investors.
How does it work? A VIE uses two entities. The first is a shell company based somewhere outside China, usually the Cayman Islands. The second is a Chinese company that holds the licenses needed to do business in the country. The two entities are connected via a series of contracts.
That means when foreign investors buy shares in a company that uses a VIE, they’re purchasing stock in the foreign shell company — not the business in China.
Didi uses this structure, along with several other major firms, including Alibaba, Pinduoduo and JD.com. The arrangement is explained in Didi’s prospectus, but not everyone is aware.
Chinese firms have been using the structure for decades because foreign investors are not really allowed to own stakes in local firms in industries including tech. Still, Chinese companies want to raise money abroad.
Creating an offshore holding company that goes public helps Chinese companies get around those rules. Wall Street and US regulators have long been cool with the arrangement, which gives American investors easy exposure to dynamic companies that are powering the world’s second largest economy.
But there are huge risks. First, it’s not clear that the contracts that entitle foreign investors to the economic benefits produced by Chinese companies are enforceable. It’s also not clear whether VIEs are legal under Chinese law.
Here’s what Didi says about the arrangement: Didi says in its prospectus that its legal counsel believes that its VIE “is not in violation of mandatory provisions of applicable PRC [Chinese] laws,” and that its contracts are “valid and binding.”
But it also included a warning to potential investors.
“We have been further advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations,” Didi cautioned. “The PRC government may ultimately take a view contrary to the opinion of our PRC legal counsel.”
Think about the problem this way: Chinese companies are essentially telling Beijing that they are 100% owned by Chinese citizens. Meanwhile, the same companies are telling foreign shareholders that they’re the real owners.
Now, there are signs that both Chinese and US regulators are becoming uncomfortable with VIEs. Investors, beware.
Read more on CNN Business.
– By Charles Riley
- A Trump-era policy intended to guard against espionage by shutting out top Chinese students from leading US research universities could be hurting America more than Beijing.
- The Taliban has seized control of Kunduz in northern Afghanistan, the first major city to fall to the insurgent group after a string of victories following the withdrawal of foreign collation forces.
- The beheading of a diplomat’s daughter in Pakistan looks set to test a legal system activists say has repeatedly failed victims of violence and needs urgent reform.
- The Indonesian army hinted that it will end its mandatory “virginity test” for female recruits. The tests have been described as “abusive, unscientific, and discriminatory” by human rights groups.