China's leaders may have thought they were protecting their economy by hushing early alarms about severe acute respiratory syndrome (SARS). But with trade and travel hurting and economists cutting their growth forecasts, some say the secrecy may have added to the damage.
Investors could be put off both by health worries and unease about Beijing's late start in talking candidly about SARS, said Andy Xie, managing director of Morgan Stanley Asia Pacific.
"Transparency and determined responses are necessary to sustain foreign investors' trust in China," Xie said.
The direct economic impact on China appears concentrated on hotels, airlines and other travel-related businesses that suffered as foreign and Chinese tourists called off trips.
Chen Xingdong, chief economist for BNP Paribas in Beijing, said the crisis could trim up to 1 percentage point off China's economic growth this year -- matching a projection Xie issued last month. Salomon Smith Barney has cut its growth forecast to 7.3 percent from 7.6 percent.
"Overall, the damage from SARS to China's economy definitely is much, much bigger than from the war against Iraq," Chen said.
Beijing is projecting growth of about 7 percent this year -- robust by the standards of a slumping global economy but just barely enough, some experts say, to create jobs and stave off unrest among an army of people thrown out of work in economic reforms.
Salomon Smith Barney predicts a rebound in services and manufacturing if the outbreak is controlled quickly. If not, the bank said, "we frankly don't know where the bottom would be."
Other economists are more cautious, saying they see no damage yet on the southern province of Guangdong, a bustling center for industry and foreign investment that was the worst-affected region.
``It's very hard to find any visible impact,'' said Jonathan Anderson, Hong Kong-based chief economist for Greater China for Goldman Sachs.
Hong Kong retailers, though, say the outbreak has cut their business in half and pleaded Monday with landlords for a temporary 50 percent reduction in rent. The chairman of Hong Kong's Retail Management Association, Yu Pang-chun, noted that retailers are among the hardest hit as tens of thousands of people stay home in fear.
"Only God knows how to solve the crisis here," said Man Ting-ping, who runs a small sock store in Hong Kong and has added surgical masks to his inventory to try and weather the slowdown.
Man said his shop had daily sales of about US$1,300 during the boom times, but it had dropped to a tenth of that by earlier this year. After the SARS crisis began, Man said his revenues plunged to about US$26 a day -- less than the price of a steamed grouper in many local restaurants.
Coming amid global economic woes, some economists say the twin blows of SARS and war in Iraq also could sap regional and worldwide economic growth.
``The SARS effect is concentrated on Asia -- long the fastest-growing region in the world and one area that essentially had been keeping the global economy afloat,'' said Morgan Stanley economist Stephen Roach.
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