China's Booming Economy to Feel Limited Jolt from Quake
he earthquake that devastated parts of central China's Sichuan province will likely have a limited impact on the country's booming economy, analysts said Tuesday, though repercussions were seen across the region.
Authorities reported about 10,000 dead from the quake, which destroyed schools, factories and other buildings in the hilly but industrialized region of small cities and towns. Thousands were buried in rubble and landslides, state media reported.
State-run television reports showed mountain roads crumpled by the quake and blocked by huge boulders unleashed by landslides. Cell phone and other telecommunications services were reported out of service across much of the region. Some airports were closed.
China's work safety agency ordered factories, coal mines, chemical plants and gas wells damaged by the quake to suspend operation for safety inspections.
''All types of production enterprises affected by the disaster, especially coal mines, chemical plants and gas wells, must immediately suspend production and evacuate staff,'' the State Work Safety Administration said in a statement on its Web site.
Sichuan province, where the 7.9-magnitude quake struck Monday afternoon, is the site of major gas fields, coal mines and the industries that have grown up around them.
China's main state-owned power company said earlier that the quake knocked out at least eight power plants and eight transformer substations.
Two chemical plants collapsed in Shifang city just north of Sichuan's capital, Chengdu, the official Xinhua News Agency reported, burying hundreds of people and spilling more than 80 tons of toxic liquid ammonia.
About 600 people were killed, although Xinhua did not say whether they died in the quake or from the chemical spill.
Details on other specific damage or shutdowns were still scarce. But most analysts said they expected a limited and brief effect on the broader economy than that caused by severe snowstorms that paralyzed much of south-central China in January and early February.
That disaster snarled transportation, knocked out power grids and forced a halt to aluminum smelting and other production in many parts of the country. Damage from the quake may be severe but it is limited to one region.
''Compared with the snowstorms, this is confined to one area and it is a very brief time,'' said Feng Yuming, an analyst with Oriental Securities in Shanghai.
China's steaming economy cooled only slightly in the first quarter despite the storms and global economic gloom, expanding 10.6 percent in January-March from a year earlier. That compared with expansion of 11.2 percent in the previous quarter.
To minimize disruptions to financial markets, China's two stock exchanges suspended trading Tuesday in 66 companies based in the quake-struck region. But share prices fell anyway, with the benchmark Shanghai Composite Index slipping 1.8 percent to 3,560.24.
China's economic planning agency ordered industries to ensure supplies of power, coal and medicine to areas hit by the quake. Banks were told to make sure adequate cash was available, while the Commerce Ministry called for companies to provide emergency shipments of instant noodles, cell phones and other needed equipment.
Toyota Motor Corp. and other Japanese companies with operations in Sichuan temporarily halted operations in the region. Toyota spokesman Hideaki Honma said production was suspended until Wednesday morning as the company assesses the condition of its joint venture plant in Chengdu.
Sichuan is one of China's most heavily populated provinces, and although it is far inland, past policies promoting industrialization away from coastal areas mean the region does have many factories.
However, Sichuan and the adjacent industrial center of Chongqing account for only about 3.5 percent of the country's total manufacturing and a minuscule 1 percent of total exports, according to Mingchun Sun, a Lehman Brothers economist.
Sichuan produces about 9 percent of China's total rice harvest, and given recent worries over shortages and surging prices, the disaster could fuel panic buying that would drive prices higher, Sun wrote in a report released Tuesday.
Strong demand for food, consumer items and construction materials could push prices higher at a time when China already is struggling to contain inflation, which remains near decade-high levels, Deutsche Bank economist Jun Ma said in a report.
While many in China were just beginning to tally the damage from the quake, others were already reckoning on the potential opportunities from the knowledge that every disaster brings a period of reconstruction.
In Tokyo trading, shares in bulldozer and heavy equipment makers like Komatsu Ltd. rose on expectations of higher demand due to the cleanup and rebuilding from the quake.
05/13/2008 06:05 AM
By ELAINE KURTENBACH AP Business Writer
SHANGHAI, China
he earthquake that devastated parts of central China's Sichuan province will likely have a limited impact on the country's booming economy, analysts said Tuesday, though repercussions were seen across the region.
