Severe acute respiratory syndrome (SARS) has caused great concern
worldwide. It has not only claimed people's lives, but has also
damaged an already stagnant world economy. But how has it affected
China's economy? How long will the impact last? Prestigious
Beijing-based
Caijing magazine published their report.
Several industries severely influenced
The five-star Grand Hyatt Beijing in Chang'an St has a usual
occupancy rate of 80 percent in March. However, the rate was
sharply slashed in April this year following the spread of
SARS.
At
the beginning of April, a total of 10,000 people cancelled their
advance bookings in China International Travel Service (CITS),
while 7,000 from China Youth Travel Service. Guangdong
International Travel Service has almost stopped its cross-border
travel service.
The seven-day Labor Day holiday is one of the three "Golden Weeks"
in China, significantly boosting China's tourism over the past
several years. The revenue from the Labor Day holiday usually
accounts for 40 percent of the year's total. However, to avoid the
fast spread of the epidemic, the State Council promulgated a notice
that shortened the holiday to 5 days, and called for no travel.
Therefore, it's estimated that the majority of travel agencies will
suffer huge losses this year.
Zhou Keyu, a manager at Guotai Jun'an Securities, pointed out that
SARS might cancel some high-level business trips, lower their
working efficiency, and accordingly, cause a negative impact on
some investment projects. He added that the psychological obstacle
couldn't be removed in the short term.
It's believed that if the epidemic can't be controlled or people
lose confidence, spending and investment will be greatly affected.
The decreasing demand, on the contrary, might also slow down
China's economy.
All those surveyed thought that the most affected industries would
be tourism, transportation, and restaurants. In addition,
entertainment, hotels, medicine, computers, Internet, trade,
banking, securities, and insurance will also be influenced.
However, it's still difficult to accurately calculate the losses
and the impact on the macro-economy.
Impact on China's investment environment
Will the impact on foreign direct investment (FDI) and trade last
for the long-term or short-term?
Zhang Liqun, a researcher at the State Council Development Research
Center, tends to support the latter view. He said that China's fast
economic growth, low labor cost and huge consumption market are
extremely attractive for foreign investors, thus trade will recover
gradually.
Zhou Keyu believes that if the epidemics were controlled in two
months, the impact on foreign investment would be too little to
calculate. However, if the epidemic last more than half a year, the
influx of foreign capital in the region where SARS prevails would
be greatly affected. Zhou added that the influx of foreign
investment would not be significantly changed, for SARS was not one
of the decisive factors for investment. He predicted that the
growth rate of actual foreign investment was still around 10
percent.
"The SARS impact on FDI and trade is only short-term, for China is
a huge economic body," said Hu Zuliu, chief economist of Goldman
Sachs, Asia.
Ma
Jun from the Deutsche Bank thought that although the government
opacity had damaged its international image, investors from the
Organization for Economic Cooperation and Development (OECD) who
have had offices in China for many years, say their investment
decisions will not be much influenced.
Ma
said that the epidemic might cancel foreign investors' visits to
China or delay their business talks. However, the decisive factors
are the Chinese market and labor costs instead of how long the
epidemic might last. In short, "The impact will be quite limited if
the epidemic is controlled this month."
(China.org.cn by Tang Fuchun, May 6, 2003)