This is China’s moment of truth. As the electronic clock on Beijing’s busy Wangfujing Street shows, there are still more than 140 days before July 13, when the IOC selects the host for the 2008 Olympic Games. But the IOC inspection team–which could make or break Beijing’s Olympic dreams–is in town this week before visiting the other four cities vying for the Games: Paris, Toronto, Osaka and Istanbul. Being awarded the Olympics is a coup for any city, for it promises a sustained dose of pride, prestige and economic development. But for Beijing it would mean something more. After half a century of self-imposed isolation and nearly 200 years of humiliation at the hands of foreign countries, it would mark China’s return as a world power. “This is China’s chance to step onto the world stage,” says one American business executive who supports Beijing’s bid. “More importantly, it would ensure that the forces of good in China win out over the forces of evil.”

The Olympics have never been solely about sports. But with Beijing leading the pack of contenders, the selection process–long tainted by politics, corruption and an ethos of excess (sidebar)–has sparked a fiercely emotional debate. Back in 1993, when Washington actively campaigned against its candidacy due to continuing human-rights abuses, Beijing narrowly lost its bid to host the 2000 Games to Sydney, Australia. Since then the city has changed dramatically: it has modernized and become more open to the world. But while Chinese citizens in general are freer than ever before, the government still cracks down ruthlessly on all forms of political dissent. So the question remains: will awarding the Games to Beijing strengthen the forces of liberalism and hasten the pace of economic and political reform? Or will it simply legitimize the regime’s bad behavior and feed its nationalistic fervor? “That’s going to be the issue, I think, in this election,” said IOC vice president Richard Pound in January. “Is it China’s turn or not?”

Nearly everybody who supports Beijing’s bid–including, it seems, the IOC’s outgoing president, Juan Antonio Samaranch–believes the Games could act as a catalyst for positive change in China. While scandals have dogged the Olympics in recent years, Samaranch has always hewed to an idealistic vision of the Games as an ennobling exercise for mankind. Giving Beijing the Games “would be a way of anchoring China to the West for the next eight years,” says Orville Schell, an expert on Chinese culture and politics at the University of California, Berkeley. With so much at stake, this argument goes, China’s leaders would have to be on their best behavior. For eight years they would not be able to reverse economic reforms. They would not dare invade Taiwan. And they might not be so inflexible on international issues such as the U.S. missile defense system. Who knows, they might even ease up on dissidents.

There is precedent for this line of thinking, say Beijing supporters. In 1981, when Seoul was selected to host the 1988 Olympic Games, human-rights activists lambasted the decision. It came just 17 months after the massacre of 200 pro-democracy activists in Kwangju. But just a year before the Games, South Korean strongman Chun Doo Hwan released 2,335 political prisoners (including current President Kim Dae Jung) and stepped down from office–paving the way for democracy. When asked about China’s bid, Samaranch often cites the case of Korea, and says: “The Olympic Games were the turning point for the country.” The message: the same thing would happen in China. “The people who oppose the bid for human-rights reasons are actually doing harm to their own cause,” says one foreign businessman living in China. “It will be impossible for China to host the Olympics and not open up.”

Human-rights activists disagree. In their view, it is wrong to reward a repressive regime. How can a country that puts millions of people in labor camps host a celebration of peace, freedom and humanity? As if to drive this point home, Amnesty International released a report last week detailing China’s use of “widespread and systemic” torture against anyone who is considered a threat, from nuns and dissidents to tax evaders and members of the Falun Gong spiritual movement. “It’s like the Nazis in 1936,” says Jin Zhong, the editor of Open magazine, a Hong Kong-based review of Chinese politics. “The Olympics enabled Hitler to get on the world stage and improve his image at home and abroad.”

Pro-democracy activist Wei Jingsheng sees the same danger with Beijing. In 1993 he was released from a Chinese prison not long before the IOC vote. Though he had been imprisoned for almost 18 years, Wei campaigned for Beijing’s bid because he thought the Games would accelerate the reform process. But he doesn’t feel that way anymore. Wei vehemently opposes the 2008 bid. He fears that the regime would simply use the Olympics to burnish its image, legitimize repression and feed a dangerous new tide of nationalism. “The situation now is different,” he said in an interview from New York. “The Olympics will be good for stirring up people’s nationalistic sentiments.” Neither of these viewpoints is supposed to matter. Last week the IOC inspection team was instructed to disregard the emotional human-rights debate and stick to purely technical issues, such as whether Beijing’s plans to improve its air quality, traffic conditions, sports facilities and visitors’ accommodations will be sufficient to handle an Olympic Games. “The evaluation commission shall not take into account any other political considerations,” IOC president Samaranch told the team. “Each IOC member is, of course, free to assess them according to his or her personal convictions.”

More than any city in the race, Beijing seems particularly adamant about keeping sports and politics separate. The irony is that, if Beijing wins, it will largely be due to politics: the IOC wants to be credited for pulling China into the 21st century. “China doesn’t deserve the bid on technical grounds,” says one American businessman who has seen the government’s plans. “If it went mano a mano with Paris, China would be on the mat. Paris has so much experience it could put on the Games blindfolded. China says separate politics from sport. But it is precisely for political reasons that it will get the Olympics.”

Beijing knows it has the inside track, but it is taking no chances. Over the past few weeks the government has mobilized 800,000 municipal workers, party cadres and students to spruce up the city for the IOC visit. Taxi drivers and subway workers have started taking lessons in a program known, unabashedly, as “Learning English to Help Beijing’s Bid.” The local government has also begun to renovate 452 notoriously filthy public toilets, to which it will assign a ranking of one to four stars–the first public-toilet-ranking system in the world. (A four-star facility will have granite floors, soothing music and a smooth automatic flush.) But perhaps the government’s most inspired move was to commission the country’s most famous filmmaker, Zhang Yimou, to make a series of five-minute commercials for the Beijing bid. Zhang, whose movies have been banned in the past for showing the backwardness of rural China, has produced ads that depict Beijing as a hip, clean, forward-looking fantasyland. “People keep asking me: ‘Hey, is this really Beijing?’ “says Zhang. “It is! I concentrated on the city’s modern aspects. I want to show that Beijing can compare to other international cities.”

The real effort this week, however, will be to convince the IOC that Beijing will be ready by 2008. That may not be easy. Beijing’s transportation network, pollution controls and existing sports facilities are crude compared with most Western cities’. The city has spent $24 million on its “New Beijing, Great Olympics” bid–more than half of it donated by foreign sponsors, led by General Motors–and it would spend $1.5 billion more if selected. Beijing is preparing a vast program of urban renewal involving more than 3,000 streets. It would demolish old shops, offices and homes, and replace them with grass, trees, pavement and sculptures. The city also plans to build 15 new sporting venues, including an 80,000-seat stadium.

Beijing isn’t Paris, of course, but the city has strengths, and it will be emphasizing them this week. The economy is growing fast and China’s ancient cultural heritage is a plus. Moreover, China is a nation of gifted athletes and enthusiastic sports fans. But one of the biggest draws of a Beijing Olympics is that it would be a business bonanza. Blue-chip foreign companies are already hatching new plans to promote their brands to China’s 1.3 billion consumers, especially as they gain more purchasing power. “Anybody doing sports business is going to prosper,” says one China-based consultant. “The market potential would explode if Beijing gets the Olympics.”

But some of the images the Beijing bid committee presents to the IOC may have troubling overtones. This week, for example, the inspection team is supposed to watch a presentation by Beijing’s Special Police Brigade. The purpose is to show the international community that China’s security forces are capable of handling everything from a riot to a hostage crisis. But amid all the explosions and kung fu kicks, is there a chance that IOC members will be reminded of the country’s human-rights problems? Then there’s the audacious plan to stage the beach-volleyball competition on Tiananmen Square, across from the Forbidden City and under the gaze of Chairman Mao’s portrait. Will the site of buff, bikini-clad athletes diving in the sand erase the memories of the bloody crackdown on unarmed student protesters in 1989?

Besides human rights, Beijing’s most visible problem is pollution. Who can imagine elite athletes running a marathon in the smoggy air of Beijing? But this is an issue that China’s leaders are actually willing–and able–to tackle. With its sweeping powers, under which the government can shut down factories, stop traffic and move entire neighborhoods with a simple edict, the regime could go a long way toward solving its environmental nightmare. Beijing has promised to spend about $12 billion over the next eight years to make its air as clean as that of Paris. It aims to convert home heating from coal to natural gas, move polluting factories out of the city and triple the amount of sewage that is treated, to 90 percent. Beijing’s air is moderately cleaner than it was two years ago. The city now claims to have “good” air quality days 45 percent of the time. And the other 55 percent? Let’s just say those days produce beautiful petrochemical sunsets.

If it weren’t for the Olympics, few people would have listened to environmental activist Sheri Liao. The founder of Global Village of Beijing, a nongovernmental organization (NGO), Liao has been trying for four years to create “green communities” around Beijing. The government ignored her until last August, when it suddenly started looking for ideas to clean up the environment. Since then Liao has been working 20-hour days helping Beijing prepare for the bid. She even went to Switzerland for the bid presentation last December, the first NGO representative ever to travel with an official Chinese delegation. “The Olympics are a catalyst for the environmental movement,” says Liao, who will meet with the IOC delegation this week. “The government is not only listening to our ideas now. They are helping us implement them.”

Not all Beijingers are delighted by the prospect of the Olympics. Before the IOC visit in 1993, the government cleared the streets of beggars, street kids, migrants and the mentally ill by sending them to “custody and repatriation camps,” where they were held indefinitely without any hint of due process. It’s not clear if that practice is happening this time. But Robert L. Bernstein, the co-chair of Human Rights in China, has said that the IOC “should insist that no such abuse of human rights be committed in the name of the Games.”

Don’t expect the Chinese government to acquiesce on human rights. Wang Wei, secretary-general of the Beijing 2008 bid committee, told NEWSWEEK that “lots of things, including human rights, will be improved” if China wins the Olympic bid. But China’s leaders have shown only a flicker of flexibility so far. Earlier this month they indicated that they would ratify a major United Nations international human-rights convention in March. They also released a political prisoner in mid-January after he had served 12 years of an 18-year sentence. Activists hope for more releases in the coming months. But no dramatic about-face can be expected. At the end of December a group of activists signed a petition urging the IOC to push Beijing for the release of political prisoners. The petition was not only ignored; in January five of the 28 people who signed it were temporarily detained and interrogated.

Any major human-rights flare-up could torpedo China’s Olympic hopes. Beijing knows this, but has done little to insulate itself. The arbitrary detention and torture of political prisoners continues. And the crackdown on the Falun Gong spiritual movement, which China’s leaders call an “evil cult,” has intensified. Falun Gong claims that more than 50,000 of its members have been detained (many of them sent to labor camps and mental institutes), while more than 100 have died in custody. In late January five Falun Gong followers set themselves on fire in Tiananmen Square–a sight that would not mix well with beach volleyball. Beijing Mayor Liu Qi, the chief of the 2008 bid, said recently that China must “crush Falun Gong.” Liu Qi is reportedly planning to make a six-city tour of the United States at the end of March. The purpose: to sell Beijing’s bid to the American media and public. But the strategy may backfire. “The mayor will be a target in the United States,” says one foreign businessman in China, who predicts protesters will meet Liu Qi at every stop. “All he’ll do is inflame the winds of discontent.”

Beijing seems outwardly confident that it will win the IOC vote this time. Asked recently about human rights, Vice Mayor Liu Jingmin responded: “Beijing’s bid is the common aspiration of 1.3 billion Chinese people. Nobody can deny them this right under the pretext of human rights.” But what if the IOC doesn’t select Beijing? After all the hype and expectation, could Beijing take a second rejection? Supporters worry that another humiliating loss of face could slow reforms and incite nationalism and xenophobia. To avoid such a prospect, some Chinese are asking for spiritual help. Over the past few weeks the monks at a Beijing temple have turned their 15th-century shrine into the “Daoist Community’s Olympic Bid Prayer Hall.” Perhaps it’s only appropriate. For this week, during the IOC’s momentous visit, even communist leaders can understand religion: it is the substance of things hoped for. And Beijing hopes, dearly, for the Olympics.