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Shanghai boasts a $2.6B stimulus package all its own

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The Olympic Games might be over, but China's enthusiasm for grand building projects is alive and kicking.

As public attention turned away from the world's most populous nation when the Olympics ended, the country was already gearing up for its next appearance on the world stage the Shanghai World Expo in 2010.

And like everything else in China, the authorities aren't doing things half way. Following in the footsteps of the Beijing Olympics, the Chinese government is renovating old city corners, having already relocated 18,000 families from the exposition site. The enormous construction project, with an estimated budget of 18 billion yuan ($2.63 billion), is expected to be completed by the end of September.

Everything will be done on a scale befitting the vast nation Baosteel Group Corp. Ltd. has already provided more than 85,000 tons of steel, primarily for construction of the major permanent venues, compared with a mere 4,500 tons of steel used to build the Crystal Palace at the original London World Expo in 1851.

Shanghai, a traditional adversary of Beijing, was overshadowed by last summer's sporting events but is eager to re-establish itself as the premier city in China. Shanghai's enthusiasm for the six-month-long event has been building since it won the bid to host the event in December 2002.

The city is plastered with posters displaying the "Haibao" (treasure of the seas) mascot, which have become ever more prevalent in recent months as they replace advertisements tied to the Olympics even though the event is still more than a year off.

The World Expo historically has been an opportunity for countries to showcase their technological advancement and prowess through exhibitions as well as develop cutting-edge architectural landmarks, such as the Eiffel Tower in Paris and the Space Needle in Seattle.

China is the first developing nation to host a World Expo, and the Shanghai World Expo will provide the city with several permanent landmark structures, such as the China Pavilion, representing a traditional oriental crown and spanning 70,000 square meters (753,500 square feet) that will serve as a cultural center after the event.

Such events have faded from public prominence in recent years as more attention is heaped on international sporting events, like the recent summer Olympics. Previous host cities have struggled to attract international visitors and balance their budgets.

The 2000 Expo in Hanover, Germany, for example, was expected to attract 40 million visitors, but only 25 million people actually turned up, leading to a $600-million deficit. And at the 2005 Expo in Aichi, Japan, only an estimated 4.6 percent of visitors were from foreign countries, despite favorable visa exemptions.

The timing of the Shanghai Expo could have been better the event will take place during the traditional typhoon season, which could ward off potential visitors. Still, China—with its fiercely nationalistic population of 1.3 billion—isn't expected to stumble when it comes to the number of visitors, even if they are predominantly drawn from the local population.

The World Expo is expected to attract more than 70 million people throughout the six-month event, with an estimated 400,000 attending daily. An online version of the event is being set up and is expected to attract 15 million to 30 million visitors daily, although there is some concern that this will discourage some from attending in person.

With the world in a global recession and China's economic growth slowing, the timing of the event couldn't be more beneficial for the local economy. The World Expo should continue to be a significant economic stimulus over the next two years. Shanghai is building many pavilions for nations to showcase their wares, but only five will remain as permanent structures while the rest will be dismantled after the event to avoid the heavy burden of maintaining idle venues.

This provides the double benefit of providing a pre-expo stimulus as the city constructs the facilities followed by a post-expo boost as resources are devoted to dismantling temporary structures. The Shanghai World Expo will allow China to build on the enormous success of the Beijing Olympics and partially mitigate the economic slowdown. China also continues to prepare for the 2010 Asian Games in Guangzhou and other major infrastructure projects, including a 200-billion-yuan ($29.28-billion) Beijing-Shanghai high-speed railway. The World Expo is only one of a series of international events that China is hosting in the coming years, but it certainly won't be the last.


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