China's powerhouse catches cold

By MAREE MacLEAN

This week, despite proclamations by Chinese Government ministers that the Sars outbreak is "effectively under control", the epidemic is starting to have a visible effect on the economy.

Guangdong province's largest annual exhibition, the China Export Commodities Fair, opened with foreign buyers and international importers conspicuous by their absence.

Last spring, the fair secured $30 billion in export orders, 14 per cent of China's total annual export orders in 2002, say the organisers.

This time bookings at five-star hotels in Guangzhou are down. The White Swan, a favoured haunt of regular international trade-fair patrons, says occupancy levels have fallen 80 per cent compared with the same period last year.

Staff at the White Swan, China Hotel and Garden Hotel have been asked to take leave owing to them.

They could face unpaid leave if the slump continues.

There are claims that Chinese officials are glossing over the epidemic's severity.

President Hu Jintao went to the frontline this week, visiting a disease control centre in Guangzhou, the main city of Guangdong province where health experts believe the outbreak of Sars (severe acute respiratory syndrome) began.

Guangdong, the mainland's economic powerhouse, has accounted for 45 of the 64 Sars deaths in China.

Since the virus began to spread, Hong Kong and China have been accused of placing their images as international economic centres above the health of their people.

Stung by the criticism, Chinese Premier Wen Jiabao has launched an all-out war on the virus, and health officials in Beijing took reporters on a tour of a hospital to ally fears that mainland hospitals are ill-equipped to cope with Sars.

The World Health Organisation is standing by its comments that local handling of the virus has been more than adequate.

]Despite the official line and WHO's reassurance, local Chinese are not convinced.

"There is some suggestion that Chinese officials did not have Guangdong under control," said one office worker.

"The big test will be on the spring break when the Chinese families go to their home-towns for the special May Day celebrations."

An expatriate commented: "Yes, there's definitely the feeling that they'd rather save face than save lives."

But he added: "If the WHO says it's under control, who the hell knows?"

The latest foreigner to die in the Guangzhou region was James Salisbury, an English academic teaching in the special trade zone of Shenzhen.

He is said to have died eight days ago while being transferred to Hong Kong.

All foreigners in Guangdong exhibiting advanced symptoms of Sars are transferred to the People's Hospital of Guangzhou for treatment. Advanced Chinese cases are treated at another local hospital.

Meanwhile, Reuters reports that clothing executive Chow Chun Yu is skipping the Guangdong trade fair for the first time in five years because his foreign clients are staying away.

"They wanted to come but their Governments urged them not to," said Mr Chow, whose family run a garment factory employing 400 in Dongguan.

He typically hosts five European customers at the fair, which has run since 1957.

If the Sars outbreak persists and foreign business travellers keep shunning the region, southern China's export engine could hiccup.

"Currently we are not travelling into Guangdong province," said an Asia executive at European home improvement retailer Kingfisher. "We are not getting any visitors coming from Europe."

Joe Zhang, head of China research at UBS Warburg, said foreign buyers would continue to source from China, "but we must never underestimate the psychological impact of Sars".

Still, with faxes, the internet and far more frequent travel by foreigners to China, the Guangzhou fair is less significant for the mainland economy than it was.

"In 1983, it was the single-most important event for the economy," said Mr Zhang.

Manufacturers are predicting delays rather than cancellation of business.

- NZPA