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Thu, May 22, 2003 - Page 12 News List

China hopes to keep travel industry afloat

AP , BEIJING

China will give 100 million yuan (US$12.1 million) in aid to airlines and other travel businesses in hopes of limiting the economic damage from SARS and is telling banks to help other companies, state media said yesterday.

The announcement came as China's third-biggest airline reportedly said it was losing millions of dollars a day due to the SARS-related drop-off in travel.

Chinese airlines, hotels and other travel businesses have been hammered by SARS as foreign travelers avoid affected areas and Beijing tries to discourage its own people from traveling.

Some hotels in Beijing and Shanghai have closed temporarily and many restaurants have shut down as customers afraid of contracting the flu-like disease stay home.

Economists say the impact could cut 1 percentage point off China's projected economic growth of 7 percent this year.

Finance Minister Jin Renqing (金人慶) said that in an attempt to cushion the blow, the government will offer companies subsidies to cover interest payments on bank loans, the official Xinhua News Agency reported.

Airlines have been among the hardest-hit, with Xinhua reporting last week that passenger traffic is this month is down more than 80 percent from the same time last year.

China Eastern Airlines, based in Shanghai, says it is losing about 20 million yuan (US$2.4 million) a day, the newspaper China Daily reported. China Eastern says it is filling only about 20 percent of its seats, down from its usual 80 percent to 90 percent.

In addition, an announcement published in state newspapers said China's central bank has ordered commercial lenders to provide short-term, low-interest loans to airlines, travel industries and retailers in regions worst affected by SARS.

The announcement said the loans are intended to encourage consumer spending and boost economic growth.

The government earlier ordered companies in SARS-affected areas not to lay off employees.

Meanwhile, there were signs that SARS is starting to affect manufacturing, a key part of China's economy, as foreign managers avoid the mainland and factories with SARS cases cut production.

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