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China's economy will still grow by 7.3 percent this year and 7.6 percent next year despite the impact of severe acute respiratory syndrome (SARS), according to an Asian Development Bank report on the outlook of regional development in 2003.
Official figures showed that China's economy grew 9.9 percent year-on-year in the first quarter, the fastest growth for the past few years. As people worried about the possible impact on certain economic sectors, investment, the major driving force behind China's rapid growth, remained intact.
Investment in fixed assets soared nearly 30 percent in the first quarter as government investment kept growing. Since the government is to invest 150 billion yuan (18 billion US dollars) in various projects this year, the growth is expected to maintain the present momentum over the next few quarters.
At the same time, non-government investment was picking up. The growth of investment funding from bank loans, foreign direct investment (FDI) and corporate financing was two times the growth of government investment in the first quarter.
In Guangdong Province, the subject of a World Health Organization (WHO) travel advisory, the contract value of FDI jumped 57.9 percent in the first quarter, while actual FDI surged 20.9 percent over the same period of last year.
Beijing and Shanghai, two of the largest cities in China, were also investing hundreds of billions of yuan in preparations for hosting the Olympic Games and the World Expo respectively.
Under the government's pro-active fiscal policy and stable monetary policy, the construction of large-scale government-funded projects was progressing on schedule.
According to the National Statistics Bureau, SARS had a negative impact on tourism, hotels and restaurants in Guangdong. However, the outbreak had so far had no obvious impact on the influx of FDI and foreign trade of the province.
International analysts said that as soon as the disease was brought under control, the most affected sectors, such as tourism, catering and civil aviation, would enjoy great rebound potential.
Last week, Airbus became the first to seize this opportunity in the market when it received orders for 30 aircraft from Beijing.
The Chinese government has adopted a clear policy in tackling the potential risks of SARS. Chinese Premier Wen Jiabao has repeatedly said the new government would on the one hand strive to win the war against SARS, and on the other firmly pursue economic development and push forward reform, opening-up and modernization.
Investor confidence has remained stable. As a result of the government's effort to fight SARS and the expectation that the disease had peaked in Asia, the Chinese stock markets stopped losing ground and stabilized this week. The steadiness will be reinforced by an extended closure during the May 1 holiday.
On the other hand, rapid economic growth laid a solid foundation for China's fight against SARS. Official figures showed no commodities in short supply. Using adequate reserves of goods such as rice, flour, oil, meat, salt, sugar, eggs, vegetables and hygiene products, the government successfully halted panic buying and maintained market stability.
The rapid growth of fiscal revenue over recent years enabled the Chinese government to swiftly allocate large amounts of resources to fight SARS. So far the central treasury had spent 5.52 billion yuan on disease prevention, treatment and research.
The Chinese government also actively supported and participated in international cooperation on SARS. The central treasury appropriated 20 million yuan on scientific research into the cause and treatment of SARS. The Chinese government also allocated 10 million yuan to set up a special fund for cooperative operations among the members of the Association of Southeast Asian Nations (ASEAN).
The Asian Development Bank said in its report that Asian economies were facing many challenges, including the dimmer outlook of Western industrialized economies and the impact of SARS. However, it said the Asian economies would be able to withstand the test because they had relatively solid bases, generally lower inflation and abundant foreign exchange reserves.
(People's Daily May 2, 2003)
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