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Impact of SARS on China may be profound

In response to global criticism of its handling of the outbreak of severe acute respiratory syndrome (SARS), China recently sacked its health minister and the mayor of Beijing. It also admitted that the number of SARS cases in Beijing was actually 10 times higher than initially announced. The government canceled the week-long Labor Day holidays that start May 1 in an effort to stem the spread of the disease. But China is still not cooperating fully with the World Health Organization (WHO), nor has it come clean on its SARS situation.

SARS is continuing to spread in China and its impact on the economy may have just begun. In light of the Chinese Communist Party's (CCP) tradition of deceit, we can expect the SARS crisis to eventually deal a lethal blow to the economy.

The party sacked Minister of Health Zhang Wenkang (張文康) and Beijing Mayor Meng Xuenong (孟學農) because they covered up the SARS outbreak. This is laughable because the two were not alone in the cover-up. They were only implementing the party's policy. The entire Chinese media covered up the matter and deceived the people. Such a cover-up was not the remit of either the health minister nor Beijing's mayor.

If the party seeks out those responsible, a massive number of officials will lose their jobs. Sacking a few officials is therefore merely a way of responding to international pressure and answering the WHO. The move did not show China's determination to openly deal with the epidemic.

Beijing has been shocked by the rampant spread of SARS. Not only has the disease spread to most of China's 31 provinces and municipalities, but it has also spread into every corner of society. Over 4,000 Beijing residents have been quarantined. The rising number is expected to reach its first climax between now and the Labor Day holidays.

A reporter recently called his doctor friend, who was assigned to an intensive care unit in a Beijing hospital. The doctor's response to the Ministry of Health's statistics was: "That's balderdash! Don't believe such government propaganda. The official figure is even lower than 0.1 percent of the real number of SARS cases in China."

The inadequate medical and communication systems in China's rural areas may greatly increase the rate of infection. It's scary just to think about it.

Although China's economy appears to be doing great, it's in fact deeply rotten. China was able to temporarily maintain its economic development due to its tight control over the media and foreign exchange, as well as its people's relatively high savings rate and the massive foreign capital that has poured into its market.

But the economy is in deep trouble. For example, the bad loan ratios of public banks are now as high as 50 percent, the unemployment rate may exceed 30 percent and the rule of law is almost absent. China has the world's worst income distribution, the most dishonorable business practices and the most rampant corruption. Any of these problems in a free society may cause social uproar, leading to an economic or governmental collapse. Thus, the collapse of the Chinese government is just a matter of time.

SARS has already damaged China's tourism industry. Many business meetings have been called off. Even its qualifications as a "world factory" are gradually fading. The country's financial and economic development cannot continue without foreign capital, which is now forcing the CCP to gradually reveal the epidemic situation. However, the party's covering up of the situation inside will eventually cause a catastrophe.

Chang Ching-hsi is a professor in the department of economics at National Taiwan University.

TRANSLATED BY FRANCIS HUANG AND EDDY CHANG
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