Report from the Taiwan Business and Commerce Times: Mainland China's Economy is in Shock Under the Effect of SARS

The spreading of SARS in mainland China is shocking. Under pressure from the World Health Organisation (WHO) and international media, the Chinese Ministration Bureau of Health published its data of SARS patients according to WHO standards. As of April 18, there were 1,807 SARS cases and 79 deaths. In order to prevent the further spreading of SARS, the government cancelled the long holiday around May 1st this year, which resulted in further damage to the tourism industry. The Beijing government ordered that all shops stop large-scale sales promotion events. After deputy Health Minister Gao Qiang corrected the latest SARS data, the Chinese President Hu Jintao and Premier Wen Jiabao took disciplinary action. Health Minister Zhang Wenkang, known to have been intentionally hiding the facts, was removed from his position as Secretary in the Party; the positions that Meng Xuenong used to hold, such as Vice Secretary of the Beijing City branch of the Party, Committee Member in charge, etc, have been taken over by Wang Qi, the current Secretary of Hainan Province.

Gao Qiang admitted that Beijing had presented incomplete and inaccurate statistics on SARS. From April 21 on, mainland China will accelerate its reporting of SARS data from one every 5 days, to a daily update. In order to prevent the further spread of SARS caused by large-scale travel, Gao Qiang announced that the upcoming May 1st long holiday will be cancelled this year.

The Chinese economy grew 9.9% in the 1st quarter of this year. But after the sudden outbreak of SARS in Beijing and other major cities, plus the cancellation of the May 1st holiday, the economy has already been damaged, especially jeopardising the tourism industry, commercial marketing and trade shows. Many big shows were delayed or cancelled; travel agencies have cancelled trips and are downsizing personnel. Experts estimate that China's GDP may be lowered by 1-2%.

SARS has already created major losses to Mainland trade shows. Yin Mingzhao, CEO of Beijing's Zhongjian Huashuo Exhibition Company Ltd. said that "cancellation requests from foreign exhibitors are non-negotiable. Normally, 15-50% of the exhibitors in a professional international trade show are foreigners. So the cancellation of all foreign exhibitors means the cancellation of all exhibits. For instance, the original International Communication Data Exhibition in Shanghai this April, 40% of the booths are from Taiwan. Now that these companies refuse to come, the trade show is delayed."

The direct income from the Chinese Exhibition industry in 2002 totals nearly 5 billion Yuan RMB, which helped the economy in relevant industries, such as lodging, dining, communication, tourism, purchasing, etc. income reach 36 billion Yuan RMB, equivalent 0.04% GDP, and increased 20% every year. If SARS is not controlled soon, it will hit the marketing/trade show industry heavily.

The tourism industry is facing the most severe crisis. Mainland China created 33.1 billion Yuan in income during last year's May 1st long holiday, with the number of tourists reaching 87.1 million. After hearing that the May 1st holiday was cancelled, an unnamed official in charge of the Guangdong Provincial Touring Industry said, "It's total collapse, don't even think about it!" China Economics Times quoted mainland China Kanghui Travel Agency Manager Li Jilie, "Because the number of tourists is dwindling, all trips through Kanghui have been cancelled in May, and most June and July trips are cancelled as well. Some travel agencies in Zhejiang Province have reduced employee salaries."

Top Chinese economics expert Hu Zuliu, employed by Gaosheng Inc., said that "since the Chinese economy is so enormous, the short-term impact (of SARS) might be tiny." But he is worried about the long-term damage, which includes foreigners' new views on the transparency of Chinese government policies.