GDP targets within reach despite SARS
( 2003-05-20 10:00 ) (1)

Despite SARS, China's gross domestic product (GDP) could still grow strongly this year, according to foreign economists attending a seminar held in Singapore on Saturday.

The impacts of SARS upon the Chinese economy are short-term, while the country's long-term economic advantages are unchanged, said Charles Chaw, an economist with Singapore-based China Knowledge Press, at the event "SARS and the Chinese Economy.''

China Knowledge Press, which co-hosted the seminar, is an information and consulting company focused on China business.

Tourism, aviation, hospitality, entertainment and retail sectors have been severely impacted by the disease, but their losses appear to have declined since mid-May when the number of SARS cases began to fall.

People are likely to postpone, rather than abandon, their purchases in these sectors until the threat of SARS fades, limiting total losses, Chaw said.

On the other hand, the disease has also created new opportunities for international business communities to expand into electronic commerce, logistics, fast delivery, and insurance.

These opportunities could partially offset losses incurred in tourism, entertainment and retail sectors, Chaw added.

Chaw's views were echoed by Paul McCabe, an analyst from China Knowledge Consulting, a subsidiary of China Knowledge Press. He argued that China's long-term advantages in manufacturing had not been shaken by SARS.

Most importantly, the manufacturing supply chain in China has not been affected, McCabe said.

Major investment institutes, including the World Bank, Asia Development Bank, JP Morgan and Morgan Stanley, predict that China's GDP growth rate this year will range between 6.5 and 7.7 per cent.

Most investment banks also forecast GDP growth of between 7.3 and 7.7 per cent, still a very high rate in global terms.

Chaw quoted a survey conducted by China Knowledge Consulting recently which found that two-thirds of senior officials from Singapore companies with business in China would not stop making business trips to China.

The survey indicates that 24 per cent of officials would not change their travel plans to China, while 43 per cent would delay their trips.

McCabe also compared indices of major Asian stock markets. The analysis found that stock markets had gradually risen since early May as oil prices and the number of new SARS infections declined.

The trend reflects people's optimism over the long-term, which is the most important factor in overcoming the economic anomaly of SARS, McCabe said.