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China’s capital is a city of extremes, physically exhausting and intimidating for its sheer sprawl and harsh climate, yet exhilarating and charming for its hidden cultural finds and mind-boggling speed of change.

While China’s manufacturing base is located in the southern Pearl River Delta, Beijing is the political and cultural heart of the country — a growing region of 17 million that is the undisputed power base of the nation of 1.3 billion people.

This story first appeared in the June 26, 2008 issue of WWD. Subscribe Today.

But while it dates to the 13th century, Beijing is not even the same place it was just five years ago. With the approach this August of the 2008 Summer Olympics — China’s first hosting of the Games — the decadelong government effort to modernize and change the city has at last reached its final stages.

Besides the world’s greatest athletes, Beijing will welcome visitors to the eighth Beijing International Jewelry Fair, July 17 to 20, at China World Trade Center. The event, the largest summer fair in China, will include 400 exhibitors from China and 25 other countries, showcasing jewelry, diamonds, pearls, gold, silver, precious stones, and machinery. About 20,000 visitors from 10 countries are expected to attend.

New infrastructure in Beijing includes three subway lines built over the past several years and “ring road” highways looping the city, which were doubled from three to six in less than 10 years. Along with its roadways, the entire city has spread outward. An estimated 3 million inhabitants of the low-lying hutong homes that gave the city its unique look were moved to outlying satellite cities, making room for new office towers and malls. This year alone, as many as 10 shopping malls are scheduled to open in Beijing.

The new malls are packed with Chinese and Western brands from midrange to luxury, including Zara, Nike, Sephora, Dior, Vuitton, Versace, Esprit, Calvin Klein, Nine West and Marc Jacobs. China’s first official Apple retail store will open in the Sanlitun Mall in the central embassy district this summer.

China eased the rules slightly on foreign retail outlets in 2004, as part of its obligation on joining the World Trade Organization. The rules remain somewhat restrictive and dictate limits on the size of retail outlets, subject to approval by the Chinese government. Foreign brands must also navigate the complex maze of China’s land rights. Outsiders can open without local partners, but many choose the often simpler route of local partnership or Chinese incorporation to cut the red tape.

New malls slated to open this year include mixed-use projects with hotels and entertainment complexes along with retail. The malls are spread all around the city, so no central part of Beijing is without a major shopping center.

Two of the world’s 10 largest shopping malls are in China: The 2004-constructed 7.3 million-square-foot Golden Resources Mall, and the 2005-built 4.3 million-square-foot Beijing Mall.

And all this is miles from the actual Olympic city north of Beijing proper, where marvels of modern architecture like the “Bird’s Nest” National Stadium will be used in August. An estimated 500,000 to 600,000 tourists will visit Beijing for the event, though that may vary due to increasing visa restrictions.

The cost to China of Beijing’s Olympic drive — including the thousands of miles of new infrastructure and new buildings — has been estimated at $20 billion to $30 billion, though the government has not provided exact figures. What is more difficult to calculate is the cultural change within Beijing as it transforms from a once quiet, ancient capital to a bustling, modern, international and perhaps more generic version of itself.

With the breakneck pace to knock down the old and develop the new, the city has lost much of its charms and cultural relics. In their place rose a showcase of modern, avant-garde architecture, spotlighting cutting-edge designs such as the China Central Television headquarters designed by Dutch architect Rem Koolhaas.

Beijing’s transformation has sometimes been met with intense criticism. Author Jasper Becker, whose new book “The City of Heavenly Tranquility,” examines the ancient capital’s destruction and makeover, said the modernization is without parallel. The 500-year-old Ming Dynasty city that once was old Peking was 64 square kilometers, or about 25 square miles. Since its demolition started in the mid-Nineties, the old portion of the city was reduced to 7 or 8 square kilometers (about 3 square miles), half of which is the old Imperial grounds of the Forbidden City.

“What they decided to do was to have this very stark, modern city planning and to cater to the avant-garde,” said Becker. “There’s nothing Chinese about it. “From a cultural and aesthetic point of view, I think it’s been a disaster.”

And what happens after the Olympics? Economists debate whether the capital overextended itself with the building boom and massive expansion of housing, office and retail space. It’s been well-documented that cities hosting Olympic Games tend to suffer mild recessions afterward, but many believe Beijing — given China’s fast economic growth — will weather those storms.

Still, some skepticism remains. Li Fei, marketing professor at Tsinghua University, noted a large portion of malls and shopping centers in Beijing are already struggling for customers. “After the Olympics, problems will unfold since the number of customers will be reduced,” said Li. “This will require the shopping centers to make changes in the way they do business in order to survive.”

But the new, more modern Beijing, chock-full of restaurants, clubs, galleries and a downright shocking

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