China economy seen weathering outbreak - analysts

The impact on China's economic growth from the Severe Acute Respiratory Syndrome (SARS) this year will be a reduction of less than 0.1 percentage points, far less than the 0.4 point cut to Hong Kong's growth, according to Ma Jun, a senior economist with Deutsche Bank.

"Most of the 31 Chinese provinces other than Guangdong, and in most sectors other than tourism, business is going as usual," Ma said.

"Even if Guangdong province were to be hit as hard as Hong Kong, the province contributes one-ninth of the country's GDP (gross domestic product)... so the SARS impact on China's annual GDP growth should be no more than a fifth of that on Hong Kong," he said.

The biggest economic impact of SARS would come from a decline in tourism, BNP Paribas Peregrine analysts said in a research report. Airlines, hotels, restaurants and other business would suffer.

With the World Health Organisation advising people to postpone travel plans to Hong Kong and the neighbouring southern Chinese province of Guangdong -- where SARS originated last year -- the travel industry is already suffering huge losses.

In some cities, tourism executives said the number of tourist groups had dropped to as low as 20 percent of the normal volume because of the virus outbreak, which has hit China harder than any other country.

The crisis has seen the cancellations of leisure trips, concerts, sports events and business conferences. The disease has killed at least 46 Chinese and infected nearly 1,200.

Intel, the world's largest chip maker, has cancelled a conference scheduled in Beijing and Sun Microsystems postponed its gathering in Shanghai next week.

"If the news gets worse, domestic tourism could hurt GDP more," Andy Xie, Morgan Stanley's chief economist for China said in a research note.

But concerns about tourism were not enough to justify cuts to China's growth forecast, said ING Barings economist, Prakash Sakpal.

He calculated that revenue from tourism only accounts for 2.5 percent of China's GDP, not nearly enough to have a significant impact on the fast expanding economy.

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