THE ECONOMY

Hosting the Olympics is not the soundest of investment strategies. All but one of the past 11 host nations had an economic hangover of sorts after the Summer Games ended, according to investment banker Morgan Stanley, which based the findings on the past hosts’ gross domestic product.

But most Chinese and Western analysts say China, the world’s fourth largest economy and a key driver of the global growth today, will not meet the same fate. That’s because Beijing accounts for only a speck of the country’s economy and population.

In that sense, experts liken the Beijing Olympic experience to that of Atlanta’s on the United States after the 1996 Olympics, where there was no economic fallout.

China has spent a record $43 billion to prepare for the games that start Friday.

Many economists say mishandling of demonstrations in Beijing would tarnish China’s image and carry broad economic repercussions, including more difficulties ahead for the country’s sovereign wealth fund to invest overseas and the potential for Western consumers to boycott Chinese goods.

The games are seen by many as a coming-out party for the rising nation, just as the Tokyo (1964) and Seoul (1988) games were for Japan and South Korea. More than those countries, China’s economic ascendance has come hand in hand with globalization and its opening up to the world. Foreign investments have flooded into the country over the last three decades.

“If the Olympics are successful, the perception of political risk will continue to be lowered even more,” said Erik Bethel, managing director of ChinaVest, an investment and advisory company with offices in China and San Francisco. “Foreigners will be interested in moving more money or setting up in China.”

Payrolls lag numbers: Back in the U.S., average hourly earnings rose as expected in July, adding 6 cents, to $18.06. Average pay is up 3.4 percent in the past year, far less than the 5 percent rise in consumer prices.

“The pickup in unemployment reduces employee bargaining power, suggesting slower wage growth in the near term,” wrote Michelle Meyer, an economist for Lehman Bros. “This should relieve some of the inflation pressure but also hinder consumers.”

From wire reports