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"A Loss May Turn Out to Be A Gain"

The wailing of air raid sirens in remembrance of the victims of the Wenchuan earthquake is already history, but the “act of nature” is far from being over. More than 10,000 aftershocks have occurred since 2:28 p.m. on May 12, 2008, when the magnitude-8 tremor struck Wenchuan in Southwest China’s Sichuan Province.

Included in this number are five measured at magnitude 6.0–6.4 on the Richter scale. While the author was compiling this article, soldiers and engineers were racing against time to dig spillways from earthquake-created lakes threatening to burst their banks as the rainy season begins in Sichuan, the most dangerous being the Tangjiashan earthquake lake in Beichuan County, close to the epicentre of the May 12 earthquake. The lake, in fact a river dammed by landslides caused by the earthquake, holds an estimated 240 million cubic meters of water. If its “dams” collapse because of another aftershock or heavy rain, torrents from it could wipe out a city downstream with a population of up to one million people, according to Xinhua, the state news agency, citing experts the Chinese Academy of Engineering.

But this is only one threat. China is also moving quickly to create a national programme to deal with the quake’s “economic aftershocks” in a stricken area of more than 100,000 square kilometres, three times as large as Belgium, including reconstruction of shattered lives and property.

On May 28, ten days after the entire nation stopped to observe a three-minute silence in honour of the earthquake dead, the National Development and Reform Commission (NDRC) announced that a state committee of experts had been set up to help deal with the “economic aftershocks.” Members of the committee are from China’s leading research institutions and universities, and over the past weeks they have been working in the afflicted areas to assess the damage and investigate the geological conditions there. “The central and Sichuan provincial governments will jointly formulate reconstruction plans on the basis of their work,” NDRC Vice-Minister Mu Hong told a press conference. That will take about three months. If all goes well, he said, the main reconstruction tasks will be accomplished in three years.

In a related development, the Sichuan Provincial Government specified on June 2 that reconstruction plans will be made public for comments and suggestions from China and across the world. Rebuilding of destroyed and damaged housing and infrastructure facilities will be the main task for the first three years, from now to 2010. From 2011 to 2015, the provincial government will work to “cap it all,” Xinhua reported from Chengdu, the provincial capital.

The central government has decided to earmark 70 billion yuan (about US$10 billion) to get the reconstruction the ball rolling. More will be earmarked from State coffers in keeping with the progress of reconstruction.

Self-Reliance

For Sichuan, the hardest hit province, the challenge will be great by any measure. As of noon on of June 2, at least 69,019 deaths had been confirmed. The death toll will definitely continue growing, given that nearly 19,000 people remain missing—most likely still trapped under debris with no hope of survival. At least 368,545 have been injured. The earthquake has left more than 15 million people homeless, and affected the lives of about 45 million people, about half of the province’s population.

According to Vice-Governor Li Chengyun, 17 of the 21 cities and prefectures under the province’s jurisdiction were affected. Among these, six cities—Dujiangyan, Pengzhou, Deyang, Mianyang and Guangyuan and Aba Tibet and Qiang Autonomous Prefecture—account for 95 percent of the loss in lives and property. As many as 90 percent of the people in these “seriously affected areas” are now homeless.

Losses in property may exceed 500 billion yuan (US$71.4 billion) throughout the province, equivalent to nearly half of the province’s 2007 gross domestic product (GDP) of 1,053 billion yuan (US$150 billion). Deputy Governor Li Chengyun told a televised press conference on May 25 that 22,248 industrial enterprises—nearly half of the province’s total—had collapsed or suffered serious damage. More than 4,400 of their employees died in the earthquake. “We are still assessing the earthquake damage,” he said. “But one thing is for sure: the local government revenue for this year will be 15 billion yuan (US$2.14 billion) less than planned.”

On an order of Premier Wen Jiabao, the Sichuan Provincial Government had sent six teams of its own officials and experts to the most seriously affected areas to investigate even before the state experts’ committee was set up. “Around August 20,” he said, “some of the damaged enterprises will start producing again and in one year from now, reconstruction and repairs will begin in an all-round way.”

Speaking at the press conference aired by CCTV, China’s national TV network, the official thanked the entire nation for the sympathy and support given to the province and its people. Meanwhile, he vowed to rebuild the province through self-reliance. “Our people are undaunted,” he said. “With support from all over the country, we will build a better future for ourselves.”

Over the weeks, aid has kept pouring into Sichuan from China and all over the world. Not to mention the rescue and relief operations by soldiers, professionals and volunteers. In addition, workers in Beijing, Hebei, Zhejiang and many other places are working day in and day out to produce tents and prefabricated housing badly needed in the afflicted areas. According to China’s Ministry of Civil Affairs, by June 1, China had received 41.54 billion yuan (US$5.93 billion) in donations from China and abroad, including in-kind donations valued in cash terms.

People in Sichuan are still trying to recover from the onslaught that caught them unprepared: disrupted coach services have largely been restored and so have power and water supply services in virtually all of the disaster-stricken cities. Farmers in Beichuan report they are using machines and tools salvaged from the debris of their collapsed homes to protect themselves and to begin rebuilding their lives. Families in their tens of thousands are being put up in tents and prefabricated housing supplied by the government or donated by Chinese and foreign charity organizations. Meanwhile, there are news reports about people building shelters using bamboo and other locally available materials. On May 16, just four days after the earthquake struck, production resumed at the Sichuan Changhong Group, a leading electronics manufacturer in China with 2007 sales revenues amounting to 400 billion yuan (US$5.71 billion). The company is based in Mianyang 180 kilometres from the epicentre. A report on its Web site mentioned “casualties” among the company’s 30,000 employees, without specifying a number.

Policy Support for Reconstruction

Changhong is one of the “super-large” State-owned enterprises operating under the State Council, China’s cabinet. For those industrial giants, the devastating earthquake will mean big write-offs. Many such companies will profit from rebuilding contracts and other opportunities, while others will be absorbing the huge losses from the disaster, according to Xinhua, citing the State-owned Assets Supervision and Administration Commission (SASAC), a cabinet-level agency that oversees enterprises like Changhong.

In a statement on its Web site reported by Xinhua, the SASAC urged major State-owned companies to play an important role in reconstruction, especially for energy, mining, machinery, chemicals and telecommunications. “Those huge opportunities are bound to boost revenues and profits, thus strengthening our financial capability to fight the ‘economic aftershocks,” Xinhua commented.

As regards smaller enterprises, officials say that some policy privileges will be worked out to assist them in reconstruction. Ensuring the purchase of relief materials is the current priority of Chinese banks in the extension of loans. The focus will soon be shifted to loaning in support of reconstruction, Xinhua reported.

Tight money supply is China’s current financial policy, which is aimed at preventing inflation from running out of control. For disaster-stricken areas, however, the policy may be less vigorously enforced.

The Sichuan Provincial Government is asking the State Council for tax exemptions and reductions on behalf of the disaster-stricken areas and also for policy privileges with regard to use of land for reconstruction. “The central government has exclusive control over taxation and use of land, and therefore it is illegal for local governments to formulate local policies toward those matters,” Vice-Governor Li Chengyun said. “But we are sure that the State Council will give due consideration to our request.”

This and other Sichuan provincial official have also pledged to “work in real earnest” to implement the central government’s industrial policies by taking advantage of the reconstruction process. Not all enterprises will be rebuilt. Those heavily polluting enterprises and enterprises consuming too much energy and electricity will be shut once for all. In particular, those small factories and mines using obsolete technology and equipment will have no chance of getting rebuilt. Meanwhile, resources allocated to high-tech, environmentally friendly enterprises for rebuilding will be more than enough to cover the losses that the earthquake caused them to suffer, said the Sichuan Daily, citing an unnamed spokesman of the provincial government.

Loss May Turn out to be a Gain

Commenting on the “aftershocks” of the Wenchuan earthquake at a press conference on May 29 in Chengdu, a spokesman quoted the time-honoured Chinese saying “Saiweng shima, yanzhi feifu”—“When the old man on the frontier lost his horse, who would have known it was a blessing in disguise?”

“This dialectical philosophy suggests that a loss may turn out to be a gain,” the spokesman explained.

Gao Shanwen, an economic analyst with the National Bureau of Statistics (NBS), held that the Wenchuan earthquake will definitely harm the Chinese economy. “But, there is something ‘positive’ in it,” he told Caijing Magazine. “Reconstruction will boost investment which, in turn, will spur the growth of China’s GDP.”

Both men were short of noting how the entire Chinese people in China and abroad got united as one behind their compatriots in Sichuan and other afflicted regions immediately after the May 12 earthquake. As Chinese leaders have repeatedly said, the devastating earthquake increased the “cohesion” of the Chinese nation, which is vital to the country’s endeavour to modernize.

This “national cohesion,” the kind of solidarity that bounds the Chinese people together in times of national plight, will continue to be vital to reconstruction in the afflicted areas.

On request of the Ministry of Civil Affairs, the Beijing, Shanghai and Tianjin municipalities and 18 provinces will each aid a hardest hit area in Sichuan Province in disaster relief and reconstruction. The relatively underdeveloped provinces of Qinghai, Tibet, Qinghai, Ningxia and Xinjiang are exempted from the duty, and so is the Xinjiang Production and Construction Corps, a paramilitary-economic body that is administratively independent of Xinjiang Uygur Autonomous Region. Meanwhile, these are obliged to help Shaanxi, the second most seriously afflicted province, through donations in cash and kind.

Beijing, the national capital, has been designated to aid Shifang City in Sichuan, plus Longnan City in Shaanxi. Shifang, once a most prosperous county-level city in Sichuan, was razed in the May 12 earthquake, with more than 6,000 confirmed deaths by May 30. On request of the central government, Beijing, right now concentrating on supplying Shifang and Longnan with badly needed tents, medicines and other relief materials, will aid the two disaster-stricken cities in their reconstruction through technical guidance and economic cooperation projects. According to Xinhua, the Shifang City Government had once planned to complete the reconstruction tasks in 20 years. The deadline was cut to five years after Beijing stepped in to help.

Companies in many places are also lending a helping hand. While making donations in cash and kind, privately-owned businesses in Wenzhou City, Fujian Province, have decided to offer 8,000 jobs to people from the earthquake-afflicted areas. On May 18, the Hangzhou-based Wahaha, a leader in China’s food and drinks industry, announced a decision to hire 1,000-1,500 men and women aged between 18 and 40 from disaster-stricken areas in Sichuan. In Shenyang, northeast China, a local diary farm named Huishan has committed itself to adopting 100 earthquake orphans and employing 300 men and women from Sichuan.

Impact on National Economy “Limited”

As the US TIME magazine rightly put it on May 22, China was “roused by the disaster. The earthquake has exposed how much China has changed and given a fleeting glimpse of what might be.”

After 30 years of market-oriented economic policies and unprecedented economic growth, China has become strong enough to withstand onslaughts like the Wenchuan earthquake. According to estimates by some experts, the annual government outlay for reconstruction—presumably 250 billion yuan (US$35.7 billion) over the next three years—will account for no more than 1 percent of the country’s GDP. 

While devastating for Sichuan, the Wenchuan earthquake will have a limited effect on the Chinese economy as a whole. Experts note that Sichuan accounts for just 4 percent of China’s annual GDP and the six hardest hit areas, for only 0.7 percent.

Less than one million pigs were killed in the earthquake. In contrast, China has a regular stock of more than 400 million, according to the Caijing Magazine. In 2007, the hardest hit areas furnished 1.8 percent of China’s port output and 1 percent of China’s grain output. “That means the country’s overall price index will not be affected,” Gao Shanwen of the NBS was quoted as saying.

Pork prices kept soaring toward the end of last year, contributing significant to the rise of consumer price index (CPI) over the past months. According to a report on the NBS Web site, in the first quarter of this year, for the same amount of goods and services the Chinese consumer had to pay 8.3 percent more than a year ago.

汶川救援：中国精神感动世界

编写/薛京晶