ECONOMIC IMPACT OF CHINA'S GREAT QUAKE
Shu-Ching Jean Chen
Forbes, May 13, 2008
HONG KONG - The largest earthquake to hit China in more than 30 years is likely to wreak great economic damage on Sichuan province and the nearby megacity of Chongqing, but not on China as a whole.
In the immediate term, it could fuel price inflation in southwestern China for food and consumer necessities due to shortages, and it could delay China's ambition to rapidly build up the nation’s answer to Silicon Valley in the area. It could also have an impact on projects to tap major natural gas deposits.
However, casualties and economic damage will be minimized by the remoteness of the region to China’s prosperous and densely populated eastern coast. Sichuan, a southwestern province of 80 million, contributes 3.9% to China’s GDP and 2.5% of its manufacturing output; Chongqing, adds 1.6% in national GDP and 1% of national manufacturing output, according to estimates from economists at Merrill Lynch.
Forbes, May 13, 2008
HONG KONG - The largest earthquake to hit China in more than 30 years is likely to wreak great economic damage on Sichuan province and the nearby megacity of Chongqing, but not on China as a whole.
In the immediate term, it could fuel price inflation in southwestern China for food and consumer necessities due to shortages, and it could delay China's ambition to rapidly build up the nation’s answer to Silicon Valley in the area. It could also have an impact on projects to tap major natural gas deposits.
However, casualties and economic damage will be minimized by the remoteness of the region to China’s prosperous and densely populated eastern coast. Sichuan, a southwestern province of 80 million, contributes 3.9% to China’s GDP and 2.5% of its manufacturing output; Chongqing, adds 1.6% in national GDP and 1% of national manufacturing output, according to estimates from economists at Merrill Lynch.
Merrill Lynch said it expected little impact on China's currency or exports "because the earthquake took place in regions almost negligible for China's external trade. This is quite different from the snowstorm, which affected both Pearl and Yangtze River deltas," it said.
The death toll from the 7.9-magnitude earthquake was approaching 10,000 Tuesday afternoon, making it the deadliest natural disaster in China since 1976, when at least 240,000 people perished in a 7.8-magnitude earthquake near the northern city of Tangshan.
The death toll from the 7.9-magnitude earthquake was approaching 10,000 Tuesday afternoon, making it the deadliest natural disaster in China since 1976, when at least 240,000 people perished in a 7.8-magnitude earthquake near the northern city of Tangshan.
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