Thu, May 08, 2003 - Page 10 News List

SARS is taking its toll on Beijing construction sites

FEAR OF CONTAGION Although no building sites have been quarantined because of the illness yet, many construction workers are choosing health over money

REUTERS , BEIJING

The US$400 million office complex being built by South Korea's LG Group should be a noisy, bustling testament to China's robust economy.

But the site for the two 34-story towers in downtown Beijing is subdued, underscoring how severe acute respiratory syndrome (SARS) is posing a new threat to China's reliance on huge building projects that help fuel the world's fastest-growing economy.

"They found a couple of SARS cases over there," said a young guard in an ill-fitting green uniform, waving towards an adjacent construction site for a Chinese insurance company.

"There are only 400 workers left here. There used to be more than 1,000, but 600 fled," the guard said as several workers in yellow hard hats squatted nearby, smoking cigarettes amid the occasional metallic clank.

SARS has hit China's high-revving economy by shutting down many shops, restaurants and other services.

Now the illness that has killed 219 in China and infected more than 4,560 is slowing down work on big projects such as LG's new office tower.

An LG spokesman in Seoul said construction of the complex was proceeding, although the conglomerate had evacuated the families of some employees.

Other projects nearby buzzed with activity, indicating that SARS has not triggered a wide-scale shutdown. Still, many giant construction cranes that dot the skyline have fallen silent.

Analysts say the construction chill that has hit Beijing could play out in other provinces if SARS continues to spread. Already Shanxi and Inner Mongolia are grappling with ballooning infections of more than 250 cases.

Officials are eyeing nervously small outbreaks in Shanghai and the rich Yangtze river delta provinces of Zhejiang and Jiangsu. Nanjing, a city five hours drive from Shanghai, forced thousands of people into quarantine this week.

Any sharp slowdown in China's building frenzy would be bad news for the world's sixth-biggest economy, which grew 8 percent last year and posted year-on-year growth of 9.9 percent in the first quarter of this year.

China has relied heavily on construction to create jobs for millions of surplus rural laborers and laid-off state workers.

The government has stoked the construction craze, issuing more than 600 billion yuan (US$72 billion) in special stimulus bonds over the past five years to fund big-ticket projects.

Fixed asset investment, covering projects from roads to apartments, soared more than 30 percent year-on-year in March, nearly double the pace of growth for all of last year.

Construction accounts for about 7 percent of China's 10 trillion yuan (US$1.2 trillion) economy.

That is a bigger chunk than tourism, which has made up about 5 percent but has been ravaged by SARS, leading many analysts to lower growth forecasts for the economy as a whole.

Beijing has quarantined four construction sites so far.

There are no details of how many people have been infected at the sites and it is unclear if SARS has spread through the ranks of workers, who are usually live packed in on-site dormitories.

But as the LG project shows, even the fear of SARS is enough to hobble plans. The prospect of workers abandoning their jobs has economists worried.

"Interprovincial travel is strongly discouraged, so that will be a problem for the supply of labor," said Tai Hui, an economist with Standard Chartered Bank in Hong Kong.

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