Analysis on Chinese Economy after Earthquake     

The Wenchuan earthquake has caused serious losses to the life and property of people in the quake-hit areas and touched the hearts of people all over the world. It has also aroused people's concern over the economic trend in China after the earthquake.
    "The earthquake is serious, but it will not have great impacts on the national economy," said Jia Kang, Director of the Institute of Financial Sciences in the Ministry of Finance.
   According to the information released by the National Development and Reform Commission (NDRC) and the banks of China, although the Wenchuan earthquake has seriously damaged the economy in the quake-hit areas and the production and the life in these areas are disturbed, the proportion of the total economic volume of the affected areas in the national total is relatively small. The total production value of Sichuan province accounts for around 4% of the national total. Badly quake-hit areas are mostly located among mountainous areas. The disaster will not change the development trend of the macro economy in China. With the production restoration and after-disaster reconstruction, the functioning of the macro economy in China can withstand the short-term blow and maintain a stable and rapid development.
   Investment, exports and consumption are the three factors promoting the economic growth and their impetus is not weakened. According to economists from the People's Bank of China, in spite of a slowdown today the export growth in China will not be much down. There is a considerable possibility for investment recovery and the after-disaster reconstruction will promote a high growth of the fixed-asset investment. The consumption will still maintain a considerable growth.
   The urban fixed-asset investment in China in the first four months this year was 25.7% higher than the same period of 2007. Economists say that the after-disaster reconstruction will promote activities in the construction sector and the economic development. Domestic and overseas experiences show that the after-disaster reconstruction will bring an investment growth.
   Sichuan is not an important region of exports in China, so the quake will have no great impact on total exports and the export growth will have no drastic reduction. What is more important, China is a big economic entity. The domestic demand plays a decisive role in the economic growth. Exports slowdown will not affect the economic growth in future.
   The domestic supply is abundant and the consumption power is brisk today. The growing income of residents and the upgrading of the social security system will ensure a high consumption growth in future. Quite a few experts think that the after-disaster reconstruction will temporarily promote the consumption of products such as construction materials in China.
   "The disaster will have an impact on the total economic amount in China, but the impact will not be big," a senior official from NDRC emphasizes, "We will closely follow the long-term impact of the disaster on the economy."
   The earthquake caused great damages to the agricultural production, industrial production and communication/transportation in the quake-hit areas. The reduction of supply will likely drive commodity price rise in a short term. Sichuan is an important grain producing region in China and holds the first place in pig-raising. Analysts think that the earthquake will increase the pressure on inflation in a short term. The after-disaster reconstruction will increase the demand for construction materials such as cement and iron/steel and also lead to a price rise of raw materials. The energy supply will have some reduction in China.
   The Chinese government has taken measures such as increasing the interest rate of bank reserves to prevent the unduly price rise of commodity and the unduly rapid growth of investment.