HONG KONG - Chinese authorities, admitting they had underestimated the damage
caused by the 7.9-magnitude earthquake that struck the southwest of the country
on Monday afternoon, have issued an urgent appeal for relief aid and workers in
the region to complement the 17,000 People's Liberation Army troops already
dispatched to the area.
More than 10,000 people have been reported dead in the strongest quake to hit
the country in 58 years, with tens of thousands more, including students
trapped under crushed houses, schools and factories. The death toll is expected
to climb
as many thousands more are still reported missing.
President Hu Jintao summoned an emergency meeting of the Politburo Standing
Commission late on Monday, calling on the army, armed police and paramilitary
forces, as well as medical personnel, to go to the quake-hit areas as soon as
possible.
Premier Wen Jiabao immediately traveled to the area to oversee rescue work. He
warned the situation was severe. "This is worse than we previously estimated
and we need more people here to help," Wen said, speaking at the disaster
relief headquarters in the city of Dujiangyan, one of the worst hit.
The reaction of the Chinese leaders is in stark contrast to that of the
military rulers in Myanmar, where relief efforts following a devastating
cyclone that has claimed the lives of tens of thousands of people have been
poor, and aid has been refused entry into the country.
The earthquake affected eight provinces - Sichuan, Gansu, Shaanxi, Yunnan,
Shanxi, Guizhou, Hubei and Chongqing, the Chinese Ministry of Civil Affairs
said in Beijing in a statement on Tuesday.
Initially, the State Disaster Relief Commission and the Ministry of Civil
Affairs set off a "Level II emergency response plan", and then upgraded it to
Level I. According to China's regulations, natural disasters are classified
into four categories based on their severity. The Level I emergency plan covers
the most serious class of natural disasters.
The death toll is the highest for a quake in China since 242,000 people
perished when the northern city of Tangshan was flattened by a quake at least
7.8 on the Richter scale in 1976. A magnitude-8.6 quake struck Tibet in 1950,
killing 1,526 people.
The quake was reportedly felt as far away as Hong Kong, Taipei and even
Bangkok, 1,800 kilometers from the epicenter. The epicenter was about 93
kilometers from Chengdu, a city of more than 12 million people, and 260
kilometers from Chongqing and its 30 million population.
Toyota Motor Corp and other Japanese companies have suspended operations in
Sichuan. A Toyota joint venture manufacturing small buses and sports utility
vehicles in Chengdu has been shut down too. The venture, Sichuan Faw Toyota
Motor, produces 13,000 vehicles a year and has 1,600 employees.
Trading in 66 listed companies based in southwestern China was suspended from
Tuesday. In a quick assessment, overseas economists were split on the impact of
the natural disaster on China's macro economy.
Merrill Lynch analysts T J Bond and Ting Lu said in a written statement, "We
think the earthquake today should have much smaller impact on China's macro
economy than the snowstorm in January-February, especially regarding CPI
[consumer price index] inflation, industrial production and exports. We thus
conclude that the earthquake is unlikely to have significant impact on current
macro policies."
Jun Ma, Deutsche Bank's chief economist for greater China, said, "At the
macroeconomic level, our current view is that the impact is limited. The
epicenter of the quake, Wenchuan county of Sichuan province, is a mountainous
area with limited industrial and agriculture production. However, due to the
damage to transportation and telecommunication facilities, tentative shortages
of supply of food and other necessities may push up food and consumer prices in
affected areas. After the quake, reconstruction is likely to help support
acceleration in fixed-asset investment growth, though to a modest extent. This
may put further upward pressure on prices of construction materials."
But William O'Neill, a partner at Logic Advisors in Upper Saddle River, New
Jersey, told Bloomberg, "The earthquake could be inflationary, depending on how
much it affects transportation. There are a lot of agricultural products grown
in the region, and that's potentially a problem."
The earthquake may cut the nation's energy demand as damaged power plants and
transmission lines force companies to shut generators. About 5.5 gigawatts,
almost 1% of the nation's generation capacity, were shut down in Shaanxi and
Sichuan after the earthquake, according to Xinhua, citing data from the State
Grid Corporation. Sichuan alone lost 4 gigawatts of capacity.
"This earthquake in China may impact demand from power plants being down," Phil
Flynn, a senior trader at Alaron Trading Corp in Chicago said in a telephone
interview with Bloomberg. "Demand for oil was already down in April."
John Ng is a freelance journalist based in Hong Kong.
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