Winter Olympics 2022: As the Tokyo Olympics ends, all eyes are now on Beijing

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.

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.

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.

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.

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.

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

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.

— By Charles Riley

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