Lushan quake to have limited impact on China economy

The direct economic cost could be more than 10 billion yuan ($1.67 billion), Barclays Bank estimated in a report released Monday, compared to the 845-billion-yuan losses inflicted by the 2008 Wenchuan earthquake.

The Barclays report also pointed out inflationary risks following the quake, but noted that the impact may be temporary.

Government stimulus to counterbalance losses

In the long term, the money that the Chinese government will invest in rebuilding will "far counterbalance" the losses caused by the earthquake, Foudy said.

"I think what they (the Chinese government) are already doing, which is to say, is to maximize humanitarian aid right now, and then to start planning the rebuilding over the next several quarters," the professor said.

"They are going to probably at some point do some sort of stimulus, even if it's localized on a smaller scale, to help out people in that area," Mark Otto, director of Knight Capital Americas LLC, told Xinhua on Tuesday.

"So that's something that may impact the Chinese economy as a whole going forward in the near term, because that might be one of the first stimulus packages that we are going to see of this year, " Otto said.

The Barclays report, using the Wenchuan earthquake as an example, forecasts that spending on post-quake reconstruction could be between 100 billion and 200 billion yuan, around 0.2 percent of the national GDP.

Construction, real estate industries to take benefit

Foudy said that in the next week, the Chinese government will obviously still be in a recovery mode, getting medicine, water and other necessities to the quake-affected people.

After that, he said, the government will start looking at reconstruction and assembling extra funding from the central or provincial government to start rebuilding.

"It will be a slight boost to local construction because there will be a lot of rebuilding efforts that are going to the province. What we saw after the last earthquake, which was much larger, was that Sichuan provinces' growth far outpaced the rest of the country," the professor said.

Talking about the earthquake's impact on the Chinese stock market, Otto said the most affected sectors could be any that has to do with finance, insurance and real estate.

"If the government takes this opportunity to actually do some sort of stimulus," Otto said. "There are sectors that might be bolstered from that, anything that deals with construction. As a result, they will actually get a boost perhaps."