Olympics: Can China Dominate the Beijing Games?

The economic story of the past several years has been China's massive growth as it has nabbed market share in important international competition and assumed a higher profile on the global stage. Nothing exemplifies China's rise more than its hosting the 2008 Olympics. Could it put an exclamation point on its upward trajectory by dominating the Games?

Economists seem to think so. Four years ago, I wrote about models that predicted Olympic medal totals based on factors that have nothing to do with sports and everything to do with what has been going on in economies around the world. The competitors in this medal-count guessing game are PricewaterhouseCoopers and Andrew Bernard of Dartmouth's Tuck School of Business. (Descriptions of Bernard's model, developed with Meghan Busse of the University of California-Berkeley, can be seen here and here.) Both engage in the classic economists' tactic of forecasting via extrapolation of the recent past. While the models differ, both share the basic assumptions that population (more potential competitors) and income levels (more resources to develop competitors) are crucial determinants of Olympic success. Both also agree that other factors enable countries to punch above their economic weight, including past performance, having been a member of the Soviet/Communist bloc, and/or home-field advantage.

This year, each of those factors would seem to weigh heavily in China's favor. Its economy has grown rapidly for many years, making it the world's second-largest when measured by purchasing power parity. It's a former member of the Communist bloc with an enduring and strong state sports bureaucracy bent on bringing home the maximum number of medals. And it's the host. Taking all of that into consideration, PricewaterhouseCoopers projects that China will better its 2004 medal haul by 40 percent, going from 63 to 88. "The combination of the home country effect and the state support for sport ... is expected to lead to a particularly significant boost to Chinese medal performance," writes PwC economist John Hawksworth.

That would allow China to edge out the United States as the leading medal miner in Beijing. Hawksworth projects the American medal count will fall nearly 20 percent from 2004, from 108 to 87. Other big losers: Russia, Germany, Australia, Japan, and France. In other words, China and some other emerging markets (Brazil, Indonesia, Mexico, Poland) are expected to grab market share from the industrialized West. Such predictions are perfectly in keeping with the shifting geography of wealth and achievement that has been a byproduct of globalization. The world may not be flat, but the valleys aren't quite as deep as they were in the past, at least when it comes to Olympic competition. In 1960, the top 10 countries won 78 percent of the medals. In 2004, the top 10 countries won nearly 56 percent. This year, PwC projects the top 10 will win only 52.4 percent.

Bernard reaches a somewhat different result this time around. He sees the rich getting richer, and the emerging world taking less of a bite. Bernard's model foresees the U.S. easily on top with 105 medals, Russia holding steady at 92, and China making only relatively modest gains, with 81 medals. Bernard also sees Germany and Australia holding steady. The net result: The top ten nations should take home 59 percent of these games' medals.

But I'm skeptical that either PwC or Bernard will come close to predicting the actual medal count. First, the 2004 projections made by both the PwC and the Bernard models didn't quite pan out. Both overestimated the degree of American decline and the gains by countries whose economies were growing rapidly but lacked a tradition of sports achievement. Both overestimated home-field advantage, and both overestimated the degrees to which established Western powers would lose market share. (Here are Bernard's 2004 projections.) As we noted in our 2004 Olympics post-mortem, PWC and Bernard projected that the U.S. medal haul would fall 30 percent and 4 percent from the 2000 total, respectively. Both foresaw that host nation Greece would more than double its 2000 medal count. And PwC boldly forecast that India would massively increase its medal count, from one in 2000 to 10 in 2004.


In Athens, the United States actually increased its medal total by more than 6 percent, from 97 to 103. Russia, predicted by PwC to lose nearly 30 percent of its 2000 medals (and by Bernard to lose about 6 percent of its medals), increased its take from 88 to 92. Greece won 16 medals in Athens, a 20 percent increase from its 2000 total, but nowhere near the massive gains the models had predicted. And India disappointed PwC by again taking home one measly medal. The excuse: "Indian sport tends to be focused on events that are not included in the Olympics, most importantly cricket," Hawksworth wrote in the introduction to the current projection.

The rampant growth in China, India, and around the globe has surely changed the way we view winners and losers in the global market. But while swift economic changes influence the models' calculations in the short term, it might take decades for money to translate into building a culture of athletic performance. And as seen by the performance of members of the former Soviet bloc, cultures of athletic excellence can endure even when the economic structures that built them have crumbled. In addition, sports are tied up with culture, geography, social mores, and traditions that aren't particularly responsive to economic changes. An ultra-wealthy country like Saudi Arabia is unlikely to produce many female Olympians.

In addition, predictions about the Olympics are difficult because of the nature of the Games. The differences separating medal-winners from nonmedal-winners are often counted in hundredths of seconds or fractions of inches. And myriad factors on the ground that have nothing to do with economics can impact the outcome of events: a last-minute injury, a runner clipping a single hurdle, or a swimmer turning in a once-in-a-lifetime performance. Finally, as I noted in 2004, I think the models continue to ignore another economic factor that enables some countries to perform above expectations. Ultimately, Olympic success revolves around a nation's ability to attract, retain, and develop human capital to its fullest potential. Historically, no country in the world has managed to do this quite as well as the United States. When the U.S. team enters the Olympic stadium in Beijing on Friday, distance runner Lopez Lomong will carry the flag. Seven years ago, he was one of the lost boys of Sudan, living in a refugee camp in Kenya. Today, he's a U.S. citizen and a contender for a medal.