Economists agreed Tuesday that China will remain a competitive player on the international market once severe acute respiratory syndrome (SARS) has been brought under control.

But they accepted that the economy may undergo setbacks in the short term with the nation's growth rate expected to drop from its remarkable January-March increase of 9.9 percent in the second and third quarters.

Experts participating in a seminar in Beijing were optimistic there will be a rebound in the final three months of the year if government measures prevent SARS from spreading successfully.

"(Foreign) investment has not been cancelled but only delayed and investment growth will be higher next year,'' said Andy Xie, general manager of Morgan Stanley.

"Demand for such commodities as computers and mobile phones is still there and (consumption) may return (to a high level) in the fourth quarter.''

The impact of SARS on the Chinese economy is starting to emerge as a number of industries such as tourism, catering, entertainment and transportation report a lack of clients as the Chinese try to avoid traveling and face-to-face contacts. A reduction in foreign direct investment and trade may also emerge soon.

The Asian Development Bank predicted earlier that gross domestic products (GDP) in China this year is likely to fall by about 0.2 of a percentage point to 7.3 percent if SARS lasts for one quarter and by half a percentage point if the epidemic continues into a second quarter. Recent research by Peking University suggested the SARS outbreak on the Chinese mainland would cause an economic loss of 210 billion yuan (US$25 billion) and predicted GDP growth this year would fall by 1 to 2 percentage points.

But China will remain one of the fastest growing economies in the world this year, according to Deepak Bhattasali, chief economist of the World Bank Resident Mission in China, who described the SARS effect on China's economy as "temporary.''

"The investment environment of Asia, particularly that of China remains unchanged because of its strong fundamentals,'' echoed Long Yongtu, secretary-general of the Boao Forum for Asia.

"China still offers the most competitive labor market, and remains one of the biggest consumer markets and its size is growing rapidly.''

Lin Yifu, director of the China Economic Research Center under Peking University, attributed the steadiness of China's economic development to the fact that the SARS outbreak has not affected China's productivity and the social structure greatly.

Another renowned Chinese economist, Hu Angang, of Tsinghua University, based his optimism on the Chinese economy's potential for long-term growth, its driving force and the stable national macro economy of the past decade.

Chinese and overseas economists all stressed the importance of successfully controlling the epidemic quickly in an effort to maintain the momentum of economic development in China.

"The key to restoring and maintaining confidence of international investors is to basically win the battle against SARS as soon as possible,'' said Long.

(China Daily May 14, 2003)