China Goes Milli Vanilli as Japan Tries Old Ways: William Pesek

Commentary by William Pesek

Aug. 15 (Bloomberg) -- It was China's Milli Vanilli moment.

Beijing officials got caught in a lip-synching act of Olympian proportions. Communist Party officials put a cuter girl before the cameras at the opening ceremony instead of the real singer, whose imperfect teeth reportedly didn't make the grade.

No one doubted China would put on its best face for the Olympics -- it just acted too literally. New York Times columnist Gail Collins called the girl the ``Potemkin performer.'' Headline writers connected the dots to the downfall of a 1980s pop group whose Grammy Awards were revoked when similar truths came out.

Olympics organizers in Beijing also can't be happy that some other moments came to light. The opening-ceremony broadcast used computer-generated images of fireworks, including a fake shake to simulate helicopter filming, because of the city's hazy skies.

What's interesting, though, is what all this says about the world's fourth-biggest economy.

Some might say the Olympics are China's big coming-out party and why not go the extra mile to make them perfect? Why not do everything possible to obscure the haze surrounding the Chinese capital and keep protesters from spoiling the fun?

Instead, it hints at China's reluctance to allow the free flow of information and essentially to trust reality. Not to overdo the haze metaphor, but China wants you to see a certain image, whether it's the Olympics or its economy. What can investors see through the smog?

Haze Metaphor

There is what China wants you to see and what the data show. China presents a picture of a harmonious and increasingly prosperous people. That image, it's hoped, will distract financiers from risks, including slowing global growth, social instability, a widening gap between rich and poor, and pollution that's far worse than the overly positive categorizations that officials are using.

There's enough haze to go around, of course. Foreign executives partying it up in Beijing -- and lavishing untold millions on the International Olympic Committee -- don't seem to care about their role in polluting China and exploiting workers. It's all good, so long as prices at Wal-Mart Stores Inc. don't rise. We'll save a discussion of hazy corporate disclosure for another column.

The connection between sports and markets is tenuous, yet economists such as Jim O'Neill of Goldman Sachs Group Inc. in London often publish reports around events, including the soccer World Cup. The basic idea is that successes in sports and economics often go hand in hand.

Events at the Beijing Games may be offering other hints about trends around the globe.

On the Mat

Take Japan. As it struggles to remain a global force amid China's rise, Japan is trying to hang on to native sports at which foreigners are increasingly excelling. Sumo wrestling, for example, is being dominated by Bulgarians, Mongolians and Russians as much as Japanese.

Then there's judo. While Japan racked up some big wins this week, there was a bit of soul-searching as its judo team got off to a rocky start. Particular attention was on two-time Olympics champion and media darling Ryoko Tani, who was upset by Alina Dumitru of Romania. Dumitru won the gold in the extra-lightweight event; Tani won the bronze.

Tani, 32, secured a place on the Olympic team even though she lost to a younger athlete in the Japan championship final. She made the team largely because of her previous successes. It would seem to be a symptom of the seniority-based employment system that's making Japan less competitive globally.

Global Forces

Also, a new generation of judo from Europe and elsewhere is changing the sport. Many Japanese competitors, such as Tani, still focus on decisively tossing opponents over their shoulder onto the mat. Non-Japanese are focusing more and more on scoring easier points and then running out the clock until they win.

In a sense, it may be a failure to adapt to global forces, and it's not unlike what's ailing Japan's economy. It shrank an annualized 2.4 percent in the three months ended June 30. If Japan had done more to wean itself off exports and an undervalued yen it might be faring better as global growth wanes.

Abhinav Bindra, meanwhile, fired himself into sporting history by ending India's 108-year wait for an individual Olympic gold medal. Yet the shooting victory also served as a reminder of how the world's second-most-populous country has one of the worst Olympic legacies, winning just 17 medals since 1900.

Olympic medals aren't everything, and it's hard to argue India's economy isn't destined for great things. Some will claim a deeper significance in China's pursuit of topping the medal count and India's lack of focus on that goal.

On that score, perhaps China's medal tally should have investors rushing into its economy. Just keep in mind that things aren't always what they seem with Asia's sights and sounds.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net