One of the main news stories of 2002 was China’s economic rise within Asia. With Japan’s continuing malaise, and other Asian countries still working their way out of the 1997 crisis, China served as the economic engine of the region.
By March, 2003, growing concern over the new disease, severe acute respiratory syndrome (SARS), began to dampen expectations for China. By the end of April, many business, travel and study plans had been put on hold. In May most, if not all, conferences and summer foreign study programs in China had been cancelled. Within China, foreign and domestic companies restricted visitors and employee travel, hotels checked the temperature of those entering, and local governments set up required border health checks of travelers with possible quarantine. Reportedly traffic in Beijing was only one-third of normal times, and the bustling shopping and restaurant scene all but died. Schools and universities were closed. Internationally, the crisis halted adoptions, delayed shipments of goods for the holidays, and forced many companies to use video conferencing instead of personal contacts (The New York Times, 1 May 2003, p.A10).
By July, China’s economy was reportedly booming again. Industrial output reportedly increased nearly 17% in June over the year before, and that was over 3% faster than in May (The Wall Street Journal, 10 July 2003). Exports surged 32% over the year before, and imports increased 40%. In addition, the World Health Organization (WHO) lifted its travel advisory for Beijing, one of the hardest hit places on the mainland, at the end of June.
The success at containing the disease and the rapid economic recovery far exceeds what most analysts predicted just a short while ago. This is good news indeed. In other ways, however, the effects of SARS on life and the economy in China will probably be more long lasting.
To begin with, health experts suggest that SARS is probably seasonal, so that next fall another round of SARS is likely. The most recent crisis raised awareness of the inadequacies of China’s healthcare and prevention system. This situation makes fear of the disease more intense, as the quality of one’s care is dubious if infected. This is true for both Chinese citizens and visiting foreigners. While the focus on healthcare may help increase government resources allocated to medical care and public health, the size and complexity of the problems will mean a long process of improvement.
Industrial and agricultural production were less affected by the crisis, while services, and particularly tourism, were devastated. Domestically, restaurants and entertainment may see a reasonable rebound, but those relying on foreign guests will be hurt for a good while to come. Since services is one area that is needed to absorb the many people under employed in the rural areas and in over staffed state owned enterprises, the effect of the SARS crisis is a serious setback.
Less measurable, but no less important, is how people view China’s progress as a result of the crisis. Clearly the cover-up in Beijing by city and health officials has not inspired confidence of Chinese citizens. Ironically, just before the crisis broke, many people in Beijing expressed a new sense of freedom of expression and access to information. After being miss-led, confidence turned to near panic. The benefits of economic growth suddenly seemed irrelevant and fragile if children could not go to school and people were afraid to shop.
Chinese officials hiding information also exacerbated Hong Kong’s situation. It became known later that some in southern China knew about this new virus as early as November, 2002, but they did not seek help or share the information in other ways. The disease quickly spread south to Hong Kong, and to other parts of the world, along international travel routes. Hong Kong was one of the places particularly hard hit by the crisis. Now citizens of Hong Kong are especially wary of changing its laws to suit the People’s Republic, and are seriously protesting proposed sedition laws. An otherwise relatively smooth reversion to Mainland sovereignty since July 1st, 1997, has become problematic.
So the SARS crisis in China has abated, and many are relieved to see the economy recover to grow at perhaps 8% this year. But the underlying fabric of confidence and optimism has been shaken. This experience could prompt social and political reforms; the other possibility of growing skepticism and mistrust would be very harmful to China’s continued progress.