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China's Economy Rebounds - 2003-07-17


Despite a period of ill health during the Severe Acute Respiratory Syndrome outbreak, China's national economy appears to be bursting with life once again. However, the country's chief economist admits that some sectors of the economy were badly affected by the health crisis.

Severe Acute Respiratory Syndrome, or SARS, had an impact of China's economy, but according to figures released Thursday, China's economy grew more than six percent this quarter, resulting in an average of more than eight percent growth for the first half of this year.

The growth estimate was the lowest quarterly figure since 1992, but China remains one of the world's fastest growing economies.

Yao Jingyuan, chief economist with the National Bureau of Statistics, says he is cautiously optimistic that the economy has recovered from the impact of SARS.

Yao says that the growth in gross domestic product in the first half of the year was hard earned, but that the economy now has enough momentum to carry it through the rest of the year.

Chinese officials and analysts have long pointed to the golden figure of seven percent GDP growth as the minimum amount needed to keep rampant urban unemployment at manageable levels.

But when then-Premier Zhu Rongji set China's economic target at seven percent at the beginning of this year, many argued that his forecasts were too conservative.

They were right, in the first three months of this year, China's economy grew by nearly 10 percent. Then SARS erupted and slowed growth in line with Premier Zhu's predictions.

However, economist Yao says that while the most important sectors of the economy were not badly hurt by SARS, others, such as catering and tourism, were. The service sector grew by less than one percent, down more than six percent from the same period last year.

SARS has also worsened rural unemployment. According to a Chinese government survey, by mid-June, more than 75 percent of migrant workers who had fled urban centers to escape SARS had not returned to their jobs in the cities.

Their delayed return is fueling worries that high poverty rates in rural China will continue to climb, despite China's seemingly optimistic economic outlook.

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