With its terrible human cost but limited economic impact, China's earthquake has thrown a spotlight on the regional disparities in development in the rapidly growing country.
Factories in the boomtowns of the east coast have fuelled China’s double-digit economic growth and won the country a reputation for being the world’s factory floor.
But the earthquake in the southwestern Sichuan region is believed to have killed more than 50,000 people and damaged more than 15 million buildings.
The government of one city alone, Deyang, has estimated the economic cost locally will be 200 billion yuan (US$28.5 billion).
Nonetheless, analysts doubt that the tragedy will dent China’s rising economic might.
“It happened in a region of mountains and forests, which is less developed and has a poor population,” said Hu Yifan, an analyst at the Natixis banking group.
“It has a limited impact on the macro level,” she said.
With 87 million people in its area of 485,000km², Sichuan has a larger population than Germany.
But it contributes only 4.2 percent to China’s GDP and serves as the base for a mere 0.6 percent of China’s exports, research by Lehman Brothers showed.
Sichuan “is a major province in terms of population and agriculture, but its part in industrial production and manufacturing is relatively small,” said Sun Mingchun (孫明春), an economist at the firm.
Monday’s quake, however, left analysts shuddering at the potential impact if it had hit the Pearl River Delta, the southern hub of manufacturing that includes Guangzhou and Shenzhen.
“There would be no comparison if the same disaster had struck the Pearl River Delta, which accounts for 30 percent of exports and 10 percent of GDP,” said Jean-Francois Huchet, director of the Hong Kong-based French Centre for Research on Contemporary China.
Sichuan has nonetheless seen rapid economic growth in recent years as the government tries to spread the recent wealth.
Sichuan’s GDP grew at 14.5 percent on an annual basis in the first quarter of this year, outpacing the 10.6 percent for the country as a whole, official data showed.
But the development has been mostly limited to isolated urban pockets including Chengdu and Chongqing, an autonomous area bordering Sichuan. Both escaped lightly from the earthquake.
“You can see from this how wealth has been distributed and how limited it has been in the west. Growth has essentially been concentrated in the coastal provinces of the east,” said Valerie Niquet, researcher at the French Institute for International Relations.
She said the earthquake would certainly have a serious impact on daily life for Sichuan residents.
The agriculture ministry said on Saturday that the earthquake had severely damaged the farm infrastructure of Sichuan and that it would be difficult to immediately resume full agricultural production.
However, the ministry promised that stepped-up production in other provinces would prevent food shortages of further rises in food prices nationwide.
Sichuan also suffered major destruction to infrastructure — including, tragically, the destruction of close to 7,000 schools as children were in class.
“The state had withdrawn and left it up to local governments, which didn’t have the means they needed,” Niquet said of the infrastructure.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure