Video #16 - SARS and China Trade
Tuesday, January 10, 2006BACKGROUND INFORMATION
According to the World Health Organization, severe acute respiratory syndrome (SARS) is caused by a virus from the coronavirus family, which is likely to change into more (or less) virulent strains over time. China's Guangzhou province has been identified as the center of an outbreak of SARS that was hidden from the world over the winter. The virus appears to spread by close contact to infected persons. It is also possible that SARS can spread more broadly through the air or in other ways not currently known. GenVEc Inc, a pharmaceutical company in Gaithersburg, Maryland, has announced that it signed an agreement with the National Institute of Allergy and Infectious Diseases at the National Institutes of Health to begin work on a vaccine for SARS.
As of April 21, reported SARS cases totalled 3,861, with 217 deaths in 25 countries. On April 23, the WHO warned against travel to Toronto, Beijing and the Shanxi province for at least three weeks, which is double the maximum incubation period for SARS. At that time, Toronto had reported 136 cases, Beijing 482 cases, and 120 people were reported ill in Shanxi. As of April 20, the U.S. Centers for Disease Control and Prevention had reported suspected cases of SARS in 36 states.
The economic results of the SARS outbreak in Asia have been devastating. Barbara Carroll, of Newsmax.com, reported on April 21, that "...travel in Singapore is down about 60 percent, with hotel occupancy down 20 percent there and even more at many Hong Kong hotels. Retail sales have been cut by as much as half in both cities. World conferences in Asia and Canada are being canceled, affecting an area of local economy that was previously a mainstay of such cities as Hong Kong." Many Asian manufacturers are said to be planning to reduce production by 20 to 30 percent from last year. The Air Transport Association reported that traffic declines for Pacific destinations were down 39.6 percent and transatlantic travel was off 25.8 percent.
Especially affected are the European buyers of fabrics from Asia. The travel restrictions limit their ability to "touch and see" the product they are purchasing. Additionally, delays in transporting products are a big part of the financial loss for many companies. European, Australian, Canadian, American and other world ports are cautious about deliveries from planes and ships. There are also new precautions for dock workers and airline personnel causing delays.
The fishing industry as far away as Auckland has been financially harmed by the new virus. As restaurants in Hong Kong and China face lack of business, the boats which supply them from Australia and New Zealand are suffering, too.
Also hard hit by SARS are the agricultural workers in the outer provinces of China and the 700 million Chinese in the rural areas where the disease is unreported and spreading. These persons are also suffering from the drop in tourism and resulting decline in demand for their products.
In Southeast Asia , SARS' economic impact is being compared to the economic crisis of 1988. Already, Singapore's government has unveiled a $130 million aid package for its tourist industry. And there are major concerns about Malaysia's tourist industry, which contributed $11.2 billion to the nation's GDP in 2002, 19% of the total.
The Macquarie Bank of Australia, the U.S. embassy and other banking institutions in Hong Kong and Singapore have given their employees the option of coming home. Another concern: will those governments retaliate against these institutions?
The SARS epidemic has seriously affected stock trading in Asia. On April 21, trading in the Singapore market was 6% weaker by midday. Asian Times reported that Taiwanese shares linked to the Chinese economy have dragged down the market in Taipei. Maggie Chien of Capital Investment Management opined: "China-concept stocks have risen three to five-fold since the year before last. They have high valuations and are just waiting for some bad news to bring the valuation down. SARS could be that news."
J.P.Morgan Chase, which has extensive investment banking operations in China, estimates that after expanding at an annual rate of 9.9 percent in the first quarter, the Chinese economy is actually shrinking at an annual rate of 2 percent in the second quarter. Governmental policies to slow the spread of SARS are increasing the economic damage. All movie theaters, Internet cafes, discos and other entertainment establishments were ordered to close on April 24. On the same date, the government of Guangdong province also said that tour groups could not enter or leave. China's national government also shortened the weeklong May Day holiday, scheduled to start on April 27, further discouraging retail spending and tourism.
The good news on April 27 was that the World Health Organization declared Vietnam as the world's first country to contain its SARS outbreak. In the fast developing world of this virus, anything seems possible.
SOURCES
Anonymous. "US economy starting to feel effect of SARS." Yahoo!Finance, April 24, 2003. Anonymous. "WHO warns against unnecessary travel to Toronto, Beijing and Shanxi province." HoustonChronicle.com, April 23, 2003.
Bradsher, Keith. "SARS brings economy in China to standstill." HoustonChronicle.com, April 27,2003.
Carroll, Barbara. "How SARS Affects the Global Economy." NewsMax.com, April 21, 2003. Sekhri, Rajiv, "SARS to hit Canada economy, finance minister says." Boston.com, April 27, 2003. Weil, Nancy, "Global SARS spread seen, economy could be affected." Bio-It World News, April 25, 2003.
LESSON PLAN
GRADE LEVEL/SUBJECT:
10-12 grade Economics, International Relations, World History, Geography, International Baccalaureate Programs (IB), Current Events.
PURPOSE:
To present activities to be used in a variety of classroom situations in order to enhance student understanding of the Asian economy and its significance globally.
OBJECTIVES:
Students will be able to:
1. Describe SARS.
2. Trace the history of the disease.
3. Illustrate the geographical spread of SARS.
4. Explain how the illness may be contained.
5. Evaluate the effect of SARS on the global economy.
MATERIALS:
1. Background information provided.
2. Resources on SARS available at your school's Media Center and the Public Library System in your area.
4. Background information available through Internet "search engines".
ACTIVITIES:
May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.
1. Prepare a report describing the SARS virus symptoms and how it spreads.
2. Use a World Map to keep an ongoing record of reported cases, deaths and recovery rates around the world.
3. Develop an ongoing timeline of the record depicted on the map.
4. Report on the methods used by affected nations to deal with the epidemic.
5. Write a pamphlet informing the public on proper health practices to combat SARS.
6. Write an editorial evaluating the role of the World Health Organization in curtailing he spread of SARS.
7. Use charts and graphs to show the current and projected economic consequences of the outbreak.
EVALUATION:
Individual assignments should be graded by the teacher using established criteria.
Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale: Content 1 = Superior (A) Creativity 2 = Excellent (B) Clarity 3 = Good (C) 4 = Fair (D) 5 = Poor (F)
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