SARS Threat in China Ruffles World Economy

As the threat of SARS, or Severe Acute Respiratory Syndrome, continues in the `world`s factory,` China, the overall industrial activities of China including tourism as well as investment in manufacturing have been greatly impacted, with the potential to also affect the world`s economy.

The Wall Street Journal reported on April 23 that the tourism industry in China already has been greatly impacted followed by increased anxiety over the possible reduction in foreign investment.

Nissan Automobiles of Japan is considering postponing the introduction of new models because foreign experts had to cancel an inspections trip to a local factory in Guangzhou. With business trip cancellations by top executives of numerous corporations who have been promoting investment in China, investor trust around the world is shrinking due to SARS.

Matsushita, a Japanese electronic firm, halted operation of its cellular phone accessory plant located in Beijing for a day on April 21, and Korean companies, SK and LG also have ordered their employees to come home along with their families.

Realizing the gravity of the situation, the Chinese government has begun to actively engage in preventing the spread of the debilitating illness. The Municipal Educational Committee in Beijing ordered a two week closure of primary education facilities (elementary, middle and high schools), on April 23 along with indefinitely postponing examinations at each school. Also, the Guidance Division of China enforced a prohibition order for government officials traveling to foreign destinations.

After the replacement of Director of the Public Health Administration, Won Kang Jang as well as the mayor of Beijing, She Noong Mung, who were recently let go from their posts, the Chinese Guidance Division is also looking into the dismissal of Zen Hwa Doong, administrative general of the Special District of Hong Kong.

Financial markets have been affected as the Shanghai Stock Exchange (SSEC) continues its downward trend, dropping 1.96% on April 21 and 1.75% on April 23.

The number of the SARS patients as of April 22 is 2,158 people, 157 people more than the previous day. With an additional five deaths from SARS on the same day, the number of deceased due to SARS now totals 97.

Hye-Yoon Park parkhyey@donga.com