By: Richard King
Within two weeks in May, 2008, Asia experienced natural disasters that took the lives of more than 200,000 people and devastated the countryside. In Myanmar, formerly Burma, clycone Nargis struck on May 2, and on May 12, an 8 point earthquake ravaged Sichuan Province in China.
Due to global media coverage, many of us are aware of the tragic results of those twin disasters and the stories of suffering and loss of lives. In this article, I would like to emphasize the economic and social impact on Sichuan province (China) and Myanmar.
First, China. The response by the Chinese government to the disaster has been swift and efficient and has scored some public relations points. Within hours of the quake, Chinese Prime Minister, Wen Jiabao was in the devastated area coordinating relief efforts. 5,000 troops were dispatched to the area; the official media was broadcasting the news non stop and foreign reporters were allowed on the scene without interference from government officials. China also welcomed foreign aid from throughout the world. China’s transparency and global dialogue was a major departure from the handling of previous disasters.
Now, let’s take a closer look at the economic impact of the Sichuan quake. (1) China’s two stock exchanges suspended trading but stocks fell 3%. (2) The economic ministry ordered companies to provide power, food and cell phones to the area. (3) Sichuan province produces 10% of China’s rice supply and worries about supply and surging prices may result in panic buying and drive prices higher. (4) The damage for the quake could result in a period of increased reconstruction. (5) Strong demand for food, consumer items and construction materials could push prices higher, contributing to inflation.
Mingchun Sun, Lehman Brothers economist states: “While the quake caused significant damage to human lives and infrastructure, we expect its impact on China’s economic growth to be temporary and limited”.
Myanmar is a totally different situation than China. It is estimated that more than 120,000 people were killed when cyclone Nargis struck. Survivors are without food, water and shelter and are falling victim to diseases like dysentery. To add to the tragic circumstances, the country’s ruling military junta under General Than Shue has not allowed much of the humanitarian aid offered by many countries into Myanmar and has refused assistance from the UN. Myanmar is a member of ASEAN but those countries have been reluctant to help for fear of antagonizing the junta. China has also not offered much help because they don’t want to risk the considerable investment they have in Myanmar.
According to the American Red Cross, the issue now facing the country is not so much the death toll, but more those who are living and ‘heading toward destitution”. The UN health agency is concerned about diarrhea, malaria and dengue fever spreading among the cyclone victims.
The economic impact on the country is significant. In the capital city, Yangan, food and fuel prices have soared. The price of a gallon of gas on the black market has doubled and the price of eggs has tripled!
Perhaps the most significant economic impact on Myanmar and other Asian nations is the situation with rice. Cyclone Nargis struck the main rice growing area of the country, worsening the food crises for Asia. It is possible that Myanmar may become a buyer on the international rice market rather than a net exporter. The area struck by the cyclone produces 65% of the countries rice.
It is no surprise that natural disasters such as we have seen in China and Myanmar bring out the best and worst in people. Yet they do remind us that no matter what our political, philosophical or country persuasion, there is a humane bonding among us. Perhaps it takes a disaster to remind us that we all have a commitment to enhance the quality of life on the planet.
Chairman Emeritus of Woodbury University
Director, Pacific Rim Programs at Woodbury University,
Chairman/Founder King International Group