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China Faces Toughest After-quake Reconstruction Since 1976

As the heroic and emotional relief efforts for the May-12 8.0-magnitude earthquake are gradually drawing to an end, China is faced with a lasting and formidable mission: reconstruction.

The earthquake, centered in Wenchuan County in the southwestern Chinese Sichuan Province, has killed 40,075 people nationwide as of 6:00 PM Tuesday and authorities said the toll is feared to exceed 50,000. Some 247,645 others were injured.

By all standards, it will be the toughest reconstruction task since 1976 when the northeastern coastal Chinese city of Tangshan was leveled by a 7.8-magnitude quake, which claimed over 240,000 lives.

But in comparison with the reconstruction in the wake of the Tangshan earthquake, the mission this time is blessed with a strong economy, which has been growing annually at nearly 10 percent on average since 1978 when China began its reform-and-opening-up drive.

Economic toll and loss of private properties

Zhu Jing, in her 30s, could have never imagined she would become what she is today -- a refugee in debt and with nothing valuable.

Following the May 12 earthquake, she was forced to flee her hometown Dujiangyan, one of the hardest-hit cities, to neighboring Chengdu, the provincial capital of Sichuan.

In Dujiangyan, the devastating earthquake had turned her home -- a flat which she bought on mortgage two years ago -- into a dilapidated building unsuitable to live in, said Zhu, an employee of a local power supply company.

"I still owe the bank nearly 100,000 yuan (about US$14,300). I have spent almost the same sum to renovate my house and buy home appliances," she said.

"Because of the disaster, my house has gone. My hardworking over the last several years has gone down the drain," said the heartbroken woman.

Zhu was not alone. In Sichuan some 2.9 million houses were flattened and nearly 14 million others damaged, according to a rough estimate.

Among them, only a small number was covered by house insurance. As of Sunday, China insurance companies had received just 28,400 house-insurance claims, said the China Insurance Regulatory Commission.

These houses were just the tip of an iceberg of the damaged or ruined properties in Sichuan.

Zhuang Jian, a senior economist of the Asian Development Bank (ADB), told Xinhua that the disaster had caused huge loss to property and wealth overnight, which is a challenging problem for reconstruction.

Clearly, the quake had ruined the economy of dozens of counties hit hard by the quake, Zhuang said.

A preliminary investigation showed that 14,207 industrial enterprises suffered 67 billion yuan of direct economic loss in the calamity, the Ministry of Industry and Information Technology said Monday.

Wang Bin, Communist Party secretary of the epicenter Wenchuan County, said the quake had flattened or greatly damaged nearly all Wenchuan's buildings and ruined factories and infrastructure.

"Undoubtedly, Wenchuan's economy sustained a fatal blow. The infrastructure built in the last decades was destroyed suddenly," Wang said.

As the Chinese governments at all levels are still focused on quake relief and disease prevention work, there is no official figure of overall economic loss arising from the disaster.

Some economists had estimated that the Chinese economy suffered a loss of over 500 billion yuan from the earthquake, more than three times that caused by the snow and ice storm in February, which swept across central China and disrupted transportation and the energy supply and pushed up commodities prices.

Zhuang, of the ADB, maintained that the earthquake's impact on the Chinese economy will be quite limited since Sichuan's GDP accounted for no more than five percent of the country's total.

Reconstruction under market economy

When the Tangshan earthquake struck in 1976, the Chinese people were living under a strictly-planned economy and didn't have many private properties.

Thirty-two years later, China has become a market economy. But in the reconstruction after the Wenchuan quake, the government still has to play a central role, said Zhuang.

The Chinese economy will be faced with a tough issue in helping those hundreds of thousands of people who lost their private property and wealth in the quake, said Wang.

Accordingly, governmental departments will have to make a thorough investigation and provide quake victims with different levels of assistance based on their losses, said the economist.

To help reconstruction, the Chinese government will need to formulate some special policies and provide a large amount of money and materials, Zhuang added.

He is right. Over the last two days, the government has already churned out some preferential policies to support the incoming reconstruction process in quake-ravaged regions.

On Monday, the People's Bank of China (PBOC, the central bank) and the China Banking Regulatory Commission (CBRC) issued a notice, requesting Chinese banks to provide financial support, including extension of loan maturities, for relief and reconstruction in quake-hit regions.

Banks should not push for loan repayment if debtors fall behind in payments, nor should they impose fines for defaults or add default notices to borrowers' credit records, said the notice.

On Zhu's case, PBOC's vice governor Su Ning had said his bank was considering "special solutions" for mortgage loans as many borrowers were either killed in the quake or had lost their homes. Further, an expected decline in borrowers' incomes following the quake would make the mortgage a heavy burden for them.

Also on Monday, the Chinese Ministry of Finance and the State Administration of Taxation jointly decided to give preferential taxation treatment to quake-stricken areas.

According to the circular, the country will give preferential tax treatment to the fight against earthquake and reconstruction after the quake in terms of corporate income tax, individual income tax, property tax, contract tax, resource tax, urban land use tax, vehicle and ship use tax, and import and export tax.

A much strong economy

After the Wenchuan quake, a rich couple who are survivors of the 1976 earthquake, won plaudits from ordinary Chinese for their generosity in making charitable donation for Wenchuan quake victims.

Zhang Xiangqing, in his late 30s, and his wife surprised many Chinese by donating a total of 100 million yuan for quake relief and reconstruction work.

The Zhangs, who founded and own the Tianjin Rockcheck Steel Group Co., Ltd., said they would like to help people in quake-hit zones to rebuild their homes and "earthquake-proof schools".

The couple is just a typical example of how ordinary Chinese, including a lot of newly-wealthy people and celebrities who became millionaires or even billionaires in recent years, are taking on unprecedented philanthropic activities to help quake relief and the ensuing reconstruction.

By Tuesday noon, donations for Sichuan earthquake relief work had reached 13.925 billion yuan (US$2.01 billion) with 12.516 billion yuan in cash and 1.408 billion yuan in goods.

Governmental officials had said that as relief work was drawing to an end, these donations will be used for reconstruction.

Such generous donations for a devastating disaster were unprecedented in China's history in terms of the total figure and the broad participation of the public.

Besides making charitable donations, there were other means to extend help.

Chen Guangbiao, chief executive of conglomerate Jiangsu Huangpu Investment who has been active in philanthropy, had brought 120 drivers and 60 digging machines from eastern China all the way to Sichuan to assist relief and road reconstruction there.

China Life Insurance (Group) Co., the nation's largest life insurer, which donated 16 million yuan in cash for quake relief, announced on May 14 that the company would pay all the living costs of those orphaned in the quake until they reached the age of 18.

Some ordinary Chinese took advantage of soaring private car ownership and drove their vehicles from across the country to the quake-hit zones to give a helping hand.

All these were made possible partly because the Chinese economy, now the world's fourth largest, and living standards of Chinese people have risen remarkably in the last 30 years of reform and opening up.

Zhuang, of the ADB, said a much stronger Chinese economy in comparison with that of 1976 has provided a solid basis for reconstruction efforts.

Moreover, he said, today's China has become increasingly open to international assistance in both disaster relief and reconstruction, which will enable it to make use of international resources.

(Xinhua News Agency May 21, 2008)


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