Sars fear for Chinese economy

Sars fear for Chinese economy

By Holly Williams
BBC correspondent in Beijing

The economic effect of Sars could be large

In China the government has announced that the nation's economy has grown by 9.9% year on year in the first quarter of 2003.

It is the highest growth rate in six years and paints a rosy picture of China's finances.

But the Sars bug, the atypical form of pneumonia that has infected over 1,400 Chinese people and killed at least 64, could spark an economic downturn.

The World Health Organization says that the effects of Sars will cost $30bn globally.

May Day test

The Chinese Government's figures are notorious for being unreliable. Analysts treat them with scepticism.

Still, the growth rate that authorities are claiming here shows that they are confident that China's economy is expanding healthily.

They are much less confident about their ability to control Sars.

Critics have embarrassed the Chinese Government, lashing out at it for not responding to the outbreak faster and for covering up the real number of infected cases.

And now Sars' latest victim could be the nation's economy.

In China, analysts conservatively estimate it will knock half a percentage point off the country's growth rate.

The Chinese authorities will get a sense of just how badly their finances have been hit in less than two weeks when the public takes a week long May Day holiday, traditionally a time of huge consumer spending.

This year, frightened by a new disease, many people plan to stay at home.