SARS takes economic toll on Asia

Hotels remain vacant and airlines suffer losses ahead of key vacation weeks in the region.

May "golden week" is a holiday that shuts down official China. Millions head for trains, planes, and automobiles to visit family and head for regional resorts.

Last year, 87 million Chinese, many in the new middle class, hit the road during golden week, Beijing tourism officials say. But this spring, fears over the epidemic known as SARS (severe acute respiratory syndrome) has cast a hemispheric-sized wet blanket over a traditional time of travel and spending along the Pacific rim - one now racking up a sizable economic toll across Asia.

Diagnosed SARS cases are rising slowly, but popular worries are jumping exponentially, gouging Asia's pocketbook. Morgan Stanley in Hong Kong expects SARS to bring a 0.6 drop in GDP for Asia, from 5.1 percent to 4.6 percent (excluding Japan).

Behind the sterile numbers are painful sudden dollar losses - measured in half-full hotels, laid off cooks, closed businesses, departing work forces, canceled conferences and exhibitions, and other interruptions of normal trade.

"If the SARS scare lasts much longer or is prolonged as a crisis, it may begin to have a negative impact on overall exports in Asia," says Lee Sung-kwon, chief economist with Goodmorning Shinhan Securities in Seoul, South Korea. "Right now it is mainly affecting service exports like tourism. But it could begin to undermine other sectors."

Hardest hit are China including Hong Kong, Singapore, and Taiwan. But fiscal reverberations are felt from Australia - where 1,000 Quantas airline employees were laid off - to Bangkok, a recent mecca for Chinese tourists, who as of last week can no longer obtain a visa for Thailand.

An executive memo circulating at Cathay Pacific, the Hong Kong-based airline, describes $3 million in losses per day and a possible closure of that air carrier. Traffic in and out of Hong Kong is a third of what it was last year, airport authorities say.

Last week, for the first time in its history, the Geneva-based World Health Organization issued a travel advisory, warning visitors to consider delaying trips to China. Monday, Chinese President Hu Jintao said he was "very worried" about the outbreak, while Premier Wen Jiabao was quoted in state media describing the situation as "grave."

New cases show up in far-flung places, usually along Asian travel routes, and photos of hardest-hit Hong Kong with streets full of citizens wearing surgical masks contribute to a pandemic mind-set that brings economic consequences.

Losses can be indirect, such as the reported drop in revenue by Hong Kong's SmarTone cellphone firm. There's a possible departure of thousands of the city's Filipina housekeepers, as well. Cuts can loom in larger ways too: Singapore Airlines has delayed acceptance of 10 Boeing 777 aircraft.

The swanky five-star White Swan hotel in Guangzhou, China, is usually full in mid-April. But with few attending a famed local trade fair this year, occupancy is 45 percent, and rates are down from $280 to $180 a night, sources say. Visits by Japanese to Hong Kong during Japan's own golden week, which starts April 24, is down 88 percent, according to JTB corporation in Tokyo.

The first SARS case is thought to have been in China's Guangdong Province, which abuts Hong Kong. Reported cases rose sharply in February and March, with more than 3,000 patients and 133 deaths, worldwide.

Forlorn expressions at places like China International Travel (CITS) in Beijing and other city travel bureaus tell their own story. CITS, the most prominent Chinese travel service, canceled all overseas tourist groups last week. It had hoped to fill 50 groups during the holidays, but booked just over half that.

"We've been hearing that Chinese tourists are stopped at the airports when they go abroad," says one CITS employee. Last week, there were two days when "no single customer" tried to enroll in a tour, says a Ms. Sun, at the state-run domestic travel bureau in Beijing.

Cynthia Wang, a young IT professional in Beijing, canceled plans to fly to Europe and is staying in Beijing during golden week, due to SARS fears. "I've never canceled a trip before," she says.

SARS repercussions have also begun to spark minor regional tensions. Last Thursday, Malaysia and Thailand stopped accepting tourist visas from China. In response, China on Friday issued a tit-for-tat policy that it would not allow Chinese tourists to visit those two states for the short term.

China has also been a budget- pleasing destination for US troops in Korea and Japan. But currently, China is off-limits for US military personnel seeking a vacation, and even officers must now get permission to travel there on business.

Both UN and US officials have been generally critical of what is seen as the uncooperative and often secretive approach Chinese authorities have taken to SARS as the number of cases rose sharply in late winter. They have questioned Beijing's statistics, as well as its lack of statistics, at certain points.

For months, SARS received no coverage in state-run media in China, though that has now changed significantly. Starting last week, newspapers like Beijing Youth Daily have run four to five stories a day, usually with story lines emphasizing that the disease is under control, that the numbers of cases are relatively small, and that while SARS is serious, Chinese should not panic.

Chinese medical sources have consistently told reporters that while Beijing is correct to say there is no serious outbreak in the capital, some also say the number of cases are higher than official statistics indicate.

The Wall Street Journal last week discovered a memo by a senior retired doctor who still treats patients at a military hospital. Beijing's official tally is 19 cases and four deaths. Jiang Yanyong, former chief of surgery at military hospital No. 301, however, listed in a memo originally sent to a state TV station, 60 SARS patients at hospital No. 309 alone, including seven deaths there.

In the past week, Beijing has starting disinfecting public places, and posting signs on buses urging Chinese to take care and to report troubling symptoms on a new hotline.

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