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Print Edition> Business
UPDATED: April 27, 2013 NO.18 MAY 2, 2013
A Big Hit
The Ya'an earthquake resulted in huge economic losses, but is unlikely to affect the national economy
By Zhou Xiaoyan
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INFRASTRUCTURE CRUMBLED: Rescuers stand in front of a collapsed building devastated by the 7.0-magnitude earthquake in Lushan County, Ya'an City, southwest China's Sichuan Province, on April 23 (IC)

The 7.0-magnitude earthquake that hit Ya'an City in Sichuan Province not only caused a heart-wrenching death toll, but also wreaked havoc on the region's economy. However, experts said that the economic losses would be much less than the 8.0-magnitude Wenchuan quake, which jolted the same province five years ago.

Losses on the rise

In late March, Ya'an planned to expand the production value of its four pillar industries— hydropower, machinery manufacturing, agricultural products processing and new materials—to 37.6 billion yuan ($6.09 billion) in 2013, a surge of 15 percent from the previous year. The unexpected earthquake has now made this goal hard to achieve, as hydropower facilities, agricultural products and historic relics were severely damaged.

About 400,000 houses in Ya'an were damaged in the quake, of which 12,850 were completely flattened. There was also extensive destruction to farm resources and public infrastructure. The earthquake damaged 34 reservoirs in Sichuan, affecting the water supply of 303,000 people. A total of 48,915 families needed to be relocated, according to the local government. Twelve hydropower facilities were also damaged.

Of all the listed companies either based in, or with hefty business interests in Sichuan, 91 released initial damage reports to the market on April 22.

Tourism brought in 7.97 billion yuan ($1.29 billion) in 2012 to Ya'an's coffers, or 20 percent of its GDP, up 25.43 percent year on year. After the earthquake, however, almost all tour groups have been suspended.

As of April 21, a total of 102 local cultural relics had been damaged after the earthquake, according to the State Administration of Cultural Heritage. The quake also damaged an additional 12 museums, affecting 274 cultural relics, according to the administration.

The Ya'an earthquake is expected to eventually be responsible for at least 42.26 billion yuan ($6.84 billion) in economic losses, the highest amount wrought by a natural disaster in recent years, according to a report by Anbound, a Beijing-based research company. Anbound made its estimation using an evaluation system with the Wenchuan earthquake as a reference.

The Ya'an earthquake occurred on the same fault line as the Wenchuan earthquake five years ago. Then, more than 87,000 people were found dead or believed to be missing. Direct economic losses in Sichuan and neighboring Gansu and Shaanxi provinces totaled 845.1 billion yuan ($134 billion), with regional infrastructure severely damaged.

Economic blow?

Experts said that China's GDP won't suffer greatly as Ya'an is not an industrial base, although it will impact the regional economy. "Back in 2008, the Wenchuan earthquake made a difference of 1 percentage point in national GDP growth, but the Ya'an earthquake can only make a difference of up to 0.2 percentage points," said Fan Wei, an analyst with Hongyuan Securities, to National Business Daily.

Zhu Ning, a professor at Shanghai Jiaotong University, echoed Fan, noting that Ya'an is neither a raw material production base nor a manufacturing zone. "The quake-hit region suffered a great loss, but it has limited impact on the whole province and China. Ya'an is not the economic center of Sichuan and doesn't account for a big proportion of the provincial GDP."

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