The quake that struck Southwest China's Sichuan Province last month could have little direct influence on China's economy as a whole, despite the heavy loss and damage it has so far caused, according to a research report released recently by Macro Economy Analysis Panel of Financial Institutes affiliated to People's Bank of China (PBOC).
According to the report, the disaster-induced impact would be found in the following two aspects:
First, reconstruction after the quake would drive up the growth rate of assets investments. The central government has allocated 70 billion yuan in reconstruction funds to the affected areas, and this is expected to be followed by more larger-scaled funding through various channels. Altogether this will ultimately put assets investment on a rapid rise, as manifested in previous post-disaster reconstruction programs.
Second, the quake disaster is likely to heighten the short-term strain on inflation. The massive quake has brought about severe destruction to industrial and agricultural production in the earthquake zone. Compounding the economic desolation in the disaster-hit region is the growing local demand for food and life necessities, which will create a fresh strain on existing price hikes. The shared experience in Japan and Taiwan – both of which were ravaged by powerful quakes – suggests that an adverse influence from the earthquake on CPI could emerge, but would not last long.
By People's Daily Online
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