As the Olympics move on from China, Richard Steer looks to the future and asks what legacy the Games will leave the People’s Republic – and what they will mean for London

The Olympics are on everyone’s mind at the moment and after spending the past couple of weeks in Beijing, I understand why. The Games were a phenomenal display of pitch-perfect organisation and unbounded spectacle. They also shifted the mood in the UK, as our team’s success surprised most. However, as I watched London mayor Boris Johnson usher in London’s time in the spotlight, I could not help wondering how much of a success the project had really been for China, and asking whether the London Games would be a magic wand or a sword of Damocles for the UK economy.

We are in the middle of an economic downturn, and London 2012 has been held up as a lifeboat on which the industry can ride out the storm. With firms including Carillion, Balfour Beatty and Lend Lease on board, I am hopeful things will run to plan. Reassuringly, work on the Olympic park started three months early, and I suspect the government will write a cheque for the Olympic village if it has to.

For the Beijing Games, China delivered everything on time. With an estimated budget of £30bn for infrastructure and property, they were the most costly Olympics on record. Beneath the glitz, however, they may have ended up simply being the most expensive TV advertisement the world has ever witnessed. China’s economic troubles were hidden behind the Games, and while the country proved its dominance on the medals table, it has yet to do so on the global arena.

In this field it is also going head to head with the US, and when the US suffers, it affects everyone. In China, there are signs of decline – during the Games there were reported discounts of 20% on the price of flats around the Bird’s Nest, some hotel rooms in Beijing, priced at £500 a night for the Games, remained empty, and the Olympic committee had to hire volunteers to fill venues.

Beneath the glitz they may have ended up simply being the most expensive TV advertisement the world has ever witnessed

During the first week of the Games, the threat of inflation and the possibility of a post-Olympic hangover pushed China’s benchmark stock exchange down to a 20-month low, making Shanghai the world’s worst-performing index this year. Small investors became jittery after the market fell before the opening ceremony and many small investors believed the government would only prop up the market to “save face” while the Games were on. At least 80% of investors forecast a further fall in the market after the Olympics and, so, wanted to sell before they ended. “The government has spent all its money on the Games instead of putting money into the market,” complained one commentator.

In addition, manufacturing in China decreased in July for the first time in the past three years, and more than 5,000 companies closed in Yiwu, the world’s biggest commercial town. Property developers in cities like Shenzhen and Shanghai that soared on borrowed credit are now coming down to earth with the kind of bump normally reserved for wayward pole vaulters. Tighter credit controls, mortgage curbs and the decline of the Yuan have combined to make life harder for them, and many saw the Olympics as a distraction rather than a long-term solution.

Of course, China was able to put a positive spin on most things. During the Beijing fortnight, former Olympic rower Sir Steve Redgrave noted that it was no coincidence that the glossy “Introduction to China” brochures distributed to 21,000 foreign journalists left out all reference to the Communist party leaders of the past.

It also helped that the financial troubles were masked by a show that would have made Barnum & Bailey green with envy, and left the image of China as global super power in everyone’s mind.

It was much easier for a one-party regime than it will be for a London committee that will have to jump over countless bureaucratic hurdles

So, what happens when the circus comes to London? Sebastian Coe, chair of the London Organising Committee of the Olympic Games, observed that it was much easier for a one-party regime to deliver the Games than a London committee that would have to jump over countless bureaucratic hurdles.

And while I would not expect the UK to suffer from the issues that have plagued the People’s Republic this year – earthquakes, snowstorms and revolts in Tibet – it will still have to contend with oil price rises, a credit crunch, the contraction of global trade and high inflation.

It would be wise to learn from Beijing and not to see London 2012 as a silver bullet. We have the opportunity to showcase our talent to the world for 14 days, but let’s make sure the Games are founded on a long-term strategy rather than a last-minute sprint for gold.