By Li Hongmei
The damage from the devastating earthquake that struck Lushan county in southwest China's Sichuan province on Saturday will not have a significant impact on the Chinese economy compared to the infamous 2008 Sichuan earthquake, according to Chinese economists and analysts.
The 7.0-magnitude quake that rocked Lushan on the morning of April 20 has so far killed at least 193 people and injured more than 11,000. Nearly 400,000 houses and 34 dams were damaged by the quake, with 48,915 families needing to be reallocated.
Zhang Yongjun, the deputy chief of the economic research department of the China Center for International Economic Exchanges, said that it is currently difficult to estimate the total economic loss caused by the Lushan quake, but the amount should be significantly less than that of the 7.9-magnitude quake that killed nearly 70,000 people in Sichuan's Wenchuan county in 2008.
According to official statistics, the economic damage from the Wenchuan quake was 845 billion yuan (US$136.7 billion), equating to around 3% of China's 2008 GDP. The total bill from areas affected by the Lushan quake, on the other hand, should be between 10 billion to 100 billion yuan (US$1.6 billion to US$16 billion), said Fan Wei, an analyst from Beijing-based Hongyuan Securities.
Even at the highest end of Fan's estimate, the impact of the Lushan quake on China's current national GDP will only be around 0.2%.
"Back then, the question was whether the Wenchuan quake would limit GDP growth from 8% to 7%," Fan said. "The question now is whether the Lushan quake will slow China's GDP growth from 7.7% to 7.6%."
China International Capital Corporation economist Peng Wensheng said that Sichuan's local economy might struggle for a little while, but agreed with Fan that the reconstruction of areas affected by the quake will have limited major economic impact on the national economy.
State Information Center of China researcher Zhang Monan said while the insurance industry might be negatively affected by the quake, the rebuilding process will generate a lot of investment for the province. Any negative impact on the performance of the stock market will also be short term, Zhang added.
Zhang said despite charitable contributions around the world, relief efforts will still be heavily dependent on the Chinese government, but with the country's wealth, disaster relief and reconstruction should not pose much of a problem.
