March 21 (Bloomberg) -- It has been a rough year so far for conventional wisdom on China.

One supposedly irrefutable truth was that China wouldn't allow stocks to plunge. Tell that to investors watching shares slump to eight-month lows. The CSI 300 index is down 25 percent this year, and it's only March.

Another is that China won't overheat. Tell that to economists analyzing what the biggest inflation increases in 11 years mean for stability in a nation of 1.3 billion people.

The latest bit of conventional wisdom to be challenged is that the Aug. 8-24 Olympics would proceed with the precision of a referee's stopwatch. Tell that to a world getting antsy about events in Tibet, which are compounding China's already festering wound from its support of the regime in Sudan, where the government is accused of aiding genocide in the Darfur region.

``The latest outbreak of violence in western provinces, but mainly in Tibet, suggests that social unrest could simmer into more visible signs of discontent before August,'' says Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.

An explosion of what the Dalai Lama, Tibet's Buddhist spiritual leader, calls ``resentment built up by years of repression'' from China is making headlines around the globe. Tibetan exiles say about 100 protesters have been confirmed killed in the past week by security forces and many more may have died amid pro-independence rallies.

Olympic Boycott?

As the world grapples with how to respond, a novel suggestion for a mini-boycott of the Olympics by VIPs at the opening ceremony is making the rounds. French Foreign Minister Bernard Kouchner, a founder of Doctors Without Borders, said the idea is ``interesting.''

Reporters Without Borders is urging heads of state, heads of government and members of royal families to boycott the Aug. 8 opening ceremony.

A broader Olympics boycott keeping athletes from competing in Beijing is extremely remote. Yet the fact such a discussion is even taking place is a black eye for China, reducing the Communist Party's hopes of getting more propagandist mileage out of the event.

China blames Tibet for the unrest. Tibet's Communist Party chief Zhang Qingli said the Nobel Peace Prize-winning Dalai Lama ``is a wolf in monk's robes,'' according to the Tibet Daily. Chinese Premier Wen Jiabao complains Tibetan protesters are just trying to undermine the Olympics.

Asking for It

Perhaps, yet China asked for it. It bid aggressively for the Olympics and argued the games would hasten the development of human rights. Tell that to imprisoned activist Hu Jia, whom Reporters Without Borders calls a ``prisoner of the Olympic Games.''

Officials in Beijing say activists shouldn't politicize the summer games, even though Chinese authorities have used them for political gain all along. Anyone who thinks Beijing 2008 is about sports isn't being realistic.

Activists had already been trying to label the summer games the ``Genocide Olympics.'' As Sudan's biggest trading partner, weapons provider and protector at the United Nations, China has a responsibility to help ease violence in Darfur. Tibet raises the stakes and the specter of another Tiananmen Square if China's crackdown continues.

Shame on the International Olympic Committee for not speaking out on Tibet. If the quid pro quo for getting the games was improved human rights, the IOC got suckered. By turning a blind eye to Tibet, the IOC is tacitly giving China a green light to crush dissenters before the Olympics.

Tibet's Plight

The IOC doesn't have a monopoly on hypocrisy here. Why aren't Westerners so quick to celebrate Kosovo's independence championing Tibet's cause? How come countries that condemned Myanmar's clampdown on monks last year aren't outraged?

China is different, of course. No one wants to cross the leaders of an economy that today produces many of the world's consumer goods and represents a massive market of tomorrow. That's why the U.S. will invade Iraq to foster democracy, while praying that already democratic Taiwan doesn't rock the boat.

Then there are those paying millions of dollars to be linked with Beijing's Olympics. Adidas AG, Coca-Cola Co., McDonald's Corp., Panasonic, Samsung Electronics Co., Swatch Group AG and other sponsors should do more to encourage restraint in Tibet. Otherwise, their images could be tarnished, along with Beijing's.

2008 Sponsors

Just look at how human-rights groups went after Berkshire Hathaway Inc.'s Warren Buffett to end investments in PetroChina Co. because of its parent company's interests in Sudan. Olympic sponsors could be in for an interesting year.

China is learning that the way it deals with domestic problems won't cut it with the international community -- or in the age of YouTube. Millions around the world have seen the March 2 video clip of Icelandic singer Bjork on a Beijing stage shouting ``Tibet! Tibet!'' during a song about independence.

Activists such as Mia Farrow and those distancing themselves from the Olympics in protest -- including Steven Spielberg -- have a free press with which to champion their causes. That means the Olympics may end up being less of a coming-out party for China than for its repressive policies.

Long before unrest flared in Tibet, China chose the Olympics slogan ``One World, One Dream.'' If China isn't careful, headline writers will be tempted to edit it to ``One World, One Nightmare.''

(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

Last Updated: March 20, 2008 12:00 EDT