"The biggest problems are the environment and transportation, so we are devoting the majority of our investment and projects to these areas," Shan said.

"In the process of these efforts, businesses and residents are moving," he added.

Beijing celebrated deep into the night after winning the Games bid last July 13, even as critics and some residents branded the Olympics the nail in the coffin of the city as they knew it.

Beijing was already in the throes of a sweeping "beautification" drive to "internationalise" the capital's helter-skelter look.

Under demolition plans that took effect in 1990, Shan said, the bulldozers were to spare only around 600 of some 6,000 maze-like alleyways, or hutongs, in Beijing's dilapidated core.

Now, he said, planners had earmarked five new areas for conservation, increasing from 17 to 21 percent the protected area within the once-walled imperial capital, he said.

Still, 69,000 households would be displaced in 2002, according to a news release, about 10 times more than in 1990.

In the past year several neighbourhoods have seen protests over forced evictions from the hutongs and over the amount of compensation offered by government-backed developers.

"It is impossible to preserve all these hutongs as museums," Shan said. The old city's makeover was geared in part towards tourism, he added.

About 2,100 people had to be moved to uncover a hidden stretch of Ming Dynasty wall which survived the demolition ordered after the Communists took power in 1949, said Shan.

Residents had donated 200,000 bricks to help restore the section of wall, which is to become the centrepiece of a new park, he said. A buffer zone of parkland would surround the outer boundary where the rest of the wall once stood.

Construction of Olympic venues would begin in the second half of 2003, he said.

Architects from 15 different countries and regions have submitted 91 proposals in open bidding for the two major Games sites to the north and west of the inner city.

The public would be able to vote on them at an exhibit opening next week, and the city would announce the winners later this year.

Shan said Beijing would sink three-quarters of its urban improvements budget from 2001 to 2005, or some 135 billion yuan ($16.3 billion), into environment and transportation.