Chinese paranoia threatens Olympic profits

While Beijing expects to welcome half-a-million overseas spectators to the coming Olympic Games, which it is promoting with the touchy-feely tagline 'One World, One Dream', foreigners based in China's most cosmopolitan metropolis, Shanghai, are suffering the fall-out from official paranoia.

Even though many of them are married to Chinese nationals, or legitimately own their own homes in the city, 20 per cent of non-Chinese residents are believed to have left - for the summer, at least - because of draconian new visa requirements and denials on extensions of residence or work permits.

Authorities claim the clampdown is essential to security, stating concerns about protests that marred the Olympic torch rally and threats of terrorism.

But those affected fear that the traditionally laissez faire attitude to entry requirements

- which have allowed thousands of entrepreneurial foreigners to live and work in Shanghai on one-year multiple entry visas (with no time limit on the length of each stay) - could be coming to an end. This would have a serious effect on future foreign investment.

Alluding to the algae outbreak that threatens Olympic sailing events in the coastal city of Qingdao, the Shanghai-based market research company Access Asia summed up the feelings of many long-term foreign residents in its email newsletter. "The China visa issue," it said, "is now becoming more unpleasant than a stroll on a Qingdao beach."

"It's ridiculous," agrees a 50-something British marketing consultant, who has lived in Shanghai since 2003. Though married to a Chinese woman and owning a £500,000 luxury apartment in the city,