The proposal has been put forward by a local government think tank as the city aims to spend a total of US$34 billion on the Games. Plans include the construction of 32 local venue projects for the sports event.

But a lack of funding has caused enterprises and economists to actively lobby the government for wider funding channels through the capital market.

"The idea of setting up a special investment fund targeting Olympic-related projects may be adopted next year if relative policy obstacles can be cleared," said He Xiaofeng, who leads the think tank for designing financial projects for the Games.

China still does not formally allow such industrial investment funds to exist, though they flourished in the country a decade ago before a nationwide rectification drive.

Yet the State Development Planning Centre is drafting a regulation on industrial investment and venture capital funds, which would legitimate and regulate the launch of such funds. Insiders said the new rule would not come out until next year because of procedure problems.

"We are pushing hard for the proposal. And things will be more optimistic next year," said He.

The planned investment fund could be launched both in Beijing and Hong Kong for investors at home and overseas, He said. The fund can be first initiated by state-owned enterprises, which will be open to individual investors. A dozen enterprises, including some overseas companies, have shown their interest in developing the new financing products together with He's team.

"The Beijing Olympics will create many lucrative business opportunities," said He. "That will make it attractive not only to project bidders, but also for industrial investors."

In three major venue projects - the State Stadium, the State Gymnasium and the State Aquatic Centre - Beijing would adopt public bidding to decide on the project contractors.

The contractors will later choose their own sub-contractors through multi-level biddings, according to an official with the Beijing Planning Commission.

The practice is expected to break the State monopoly in such major infrastructure constructions, giving a broader stage for private investors.

He said his team will work hard to enable a sound financial backup for these investors.

When bank loans and fiscal input are not enough to support the funding chain, building up the capital pool is crucial for many private investors, experts said.

"If the financial problem cannot be solved, then the promise of fair and open bidding would be out of the question," said He.

Apart from the investment fund, other funding measures proposed by the think tank include the issuance of long-term corporate bonds, and listing new companies.

(China Daily July 17, 2002)