The SARS Epidemic in 2003 Relevant Economics Variables in China

SARS (Severe Acute Respiratory Syndrome) was a new infectious disease which was first recognized in late February 2003 and has put the world on alert. This is a respiratory disease in humans which is caused by the SARS corona virus. The virus appears to be highly contagious and fatal. World Health Organization reported that the SARS between November 2002 and July 2003 cause 8,096 known infected cases and 774 deaths (a mortality rate of 9.6%) worldwide on April 21, 2004.

Many countries have successfully contained the SARS outbreaks and local transmission, but the SARS still had a great influence in economy of these countries. The purpose of this assignment is to provide an assessment of the China economic impacts during the SARS Epidemic in 2003.

Gross Domestic Product (GDP)

Actually, the SARS Epidemic in 2003 did not have great influence on China’s GDP.
China's gross domestic product (GDP) in 2003 hit 11.694 trillion Yuan (US$1.414 trillion), up 9.1 per cent over the previous year. The National Bureau of Statistics said that in terms of different quarters in 2003, GDP in the first quarter was up 9.9 percent, the second 6.7 percent, the third 9.6 percent and the fourth 9.9 percent respectively and the per capita GDP reached a record US$1,090. As you can see, during the SARS time the GDP just dropped a bit.

A group of Chinese Academy of Social Sciences economic experts delivered an analysis on China‘s post-SARS economy development, which reported the negative impact of SARS on China’s economy did not exceed one percentage point in growth of GDP. The achievement was a hard-won successful one after the outbreak of the severe acute respiratory epidemic and frequent natural disasters.

In our opinion that is because of the momentum of SARS was mitigate progressively and another important reason was the economy of China had came into new cycle of faster increase time. China's economic development has entered a new era.

China’s GDP:

[pic]
Source: made by the writer from the National Bureau of Statistical of China, 2004

Table 2-1

China’s real GDP growth rate:

[pic] Source: made by the writer from the National Bureau of Statistical of China, 2004

Table 2-2

]
Unemployment Rate

The government said that last three months ending July in 2003 the unemployment had a record rate of 8.7 % .About 309.000 people were out of work because of the SARS crisis.

The Census and Department said the unemployment “would remain high as a result of the continued entry of fresh graduates and school leavers into the labour market”. End of June the unemployment peak rate 8.6

The unemployment increases in: trading, hotels and recreational sectors unfortunately jobless decreased in, constructions, restaurants and business services. The airline companies were suffering because of SARS spread.

[pic]
Source: made by the writer from the National Bureau of Statistical of China, 2004

Table 3-3

Apparently the unemployment rate has been expected, Francis Lun the general manager of Hong Kong Fulbright Securities said: “we re expecting the unemployment rate peaked in July as things are looking much better in August “,” Business in the retail sector has returned in the pre-SARS level. Some companies are even doing better than the time before SARS”.

SARS killed 299 people in China and more than 8200 people were infected worldwide. The tourism and the industry were devastated. A travel warning has to be imposed on Hong Kong at the beginning of April until May 23 by The World Health Organization.

In July 1.3 million people visit the city and 78% increase in June. Unfortunately 5 % still down from the same period last year. Hotels reached 60% in June compare to May 20 % during SARS crisis. Officials were expecting a gradual return of long-haul international travelers.

Some Hong Kong people looked pessimist about economic prospects:
A 30-years-old finance manager Sharon Wong said: “Many of my friends are still looking for jobs,” the recovery in our sector is slow and it’ll take a long time before thing will really look good”.

On the whole, in the aspect of export and import, SARS had only a little effect on export and import. China still kept amazing export and import growth rate. We can see clearly in table 4-1, total value of import and export in 2003 reached 851.2 billion US dollars, up 37.1 percent over the previous year. The value of export was 438.4 billion US dollars, up 34.6 percent, and the value of import was 412.8 billion US dollars, up 39.9 percent.

Import and Export by Major Categories, 2003

|Item |Value |Increase over 2002 |
| |(100 million USD) |(%) |
|Total export |8512 |37.1 |
|Export |4384 |34.6 |
|Of which: General trade |1820 |33.7 |
|Processing trade |2418 |34.4 |
|Of which: Mechanical and electrical products |2275 |44.8 |
|Of which: High and new-tech products |1103 |62.6 |
|Import |4128 |39.9 |
|Of which: General trade |1877 |45.4 |
|Processing trade |1629 |33.3 |
|Of which: Mechanical and electrical products |2250 |44.6 |
|Of which: High and new-tech products |1193 |44.0 |

Source: made by the writer from the National Bureau of Statistical of China, 2004
Available from: http://www.stats.gov.cn/tjgb/ndtjgb/qgndtjgb/t20040226_402131958.htm

Table 4-1

Effect of SARS has its limitation in export and import. Major influences are in Food and Live Animals Used chiefly for food, Light and Textile, especially agriculture. Since China’s agricultural products bore the brunt of the invasion of SARS, many foreign countries set up the technical barriers to against the export of China’s agricultural, such as Japan, it banned import of all poultry products from China. Some experts calculate that SARS caused export and import amount reduced about 2.688 billion, it is only directly influence, but these influences is only in April and May. Since June, with SARS began to be gradual control, export and import amount started to rise again. On the whole, table 4-2 shows that SARS also affects export and import of agriculture products only a little.

Import and Export of agriculture products by Major Categories, 2003

(Billion, US dollar)
|Item |Value |Increase over 2002 |
| | |(%) |
|the import and export value of | | |
|agriculture products |32.44 |36.9 |
|Export value |15.97 |18.2 |
|Import value |16.47 |13.7 |

Source: made by the writer from the National Bureau of Statistical of China, 2004

Table 4-2

Other Relevant Economic Variables

It is worth mentioning that the effects of SARS on tourism and consumption.
(1) A sharp decrease in the volume of consumption affects the consumers having less shopping. This is because SARS is a kind of transmitted disease that can spread to human bodies. As consumers are not able to shop physically, they shop online. But there are not many online shops available. Anyway, online shopping cannot be replaced by retail shopping, because it does not have a physical shop to provide? The spirit and enjoyment. Just like television, radio or email cannot be replaced by newspaper. Or if everyone snatches items, the price of the items from a small shop will increased greatly. Or even affect the consumers for the number of visits to hospitals and tours.

(2)The spending power in tourism is affected in the following service facilities like transportations, hotels, restaurants, tourist attractions and shop owners. These services affect the tax reduction or discontinuity in the commercial activity of tourism. During SARS epidemic, travel to China has dropped, with several airlines that offer service to China canceling regularly scheduled flights due to insufficient bookings.

Summary

A situation like this is really hard to manage. Everybody were in a crisis you can’t control everything and everyone. We think China has been fighting the disease spread and prepared the alarming situation as better as possible they could do, they tried to take the best decisions but they know now how to manage for a complicated and tricky situation like this one. Anyway, China did a good job during this time and it shows that China’s economic development has entered a new area.

Hope that the same situation won’t happen anywhere any more.

Reference list

Table 2-1 from: http://en.wikipedia.org/wiki/severe.acute.respiratory.sydrome Cited 3 March, 2008

Li Deshui, 2004. Official: China’s GDP growing 9.1% in 2003(online).Available from: http://www.chinadaily.com.cn/en/doc/2004-01/20/content_300524.htm Cited 2 March 2008.

NEWS 2003 Today View/Total View: 1/471(online). Available from: http://www.trade.gov.cn/english/php/show.php?id=288 Cited 2 March 2008.

Picture National Bureau of Statistical of China, 2004 Available from: http://www.stats.gov.cn/tjgb/ndtjgb/qgndtjgb/t20040226_402131958.htm Cited 2 March 2008.

Unemployment Hong Kong 2003 （online）Available from: www.chinadaily.com Cited 7 March 2008.

-----------------------
Import and export performance