Dear Fellow Investor,
Devastating. There's no other way to describe the aftermath of the 7.9-magnitude earthquake that rocked the western Sichuan Province in China two weeks ago.
The numbers are simply tragic: 67,183 dead, 361,822 injured and 20,790 missing. More than 45.61 million people have been affected by the earthquake.
As if the quake destruction wasn't enough for the country to deal with right now, the Sichuan Province is dealing with the next potential natural disaster -- floods. Eastern China has experienced torrential downpours this week, and weather forecasters were predicting thunderstorms in the quake-stricken region.
With a large lake created by the earthquake, 800,000 survivors of the earthquake who are living downstream from the lake are now at risk. The Chinese government sent in more troops and police forces to the area to help evacuate those at risk.
And if that wasn't enough, the Sichuan Province has also experienced aftershocks recently. The strongest aftershock since the May 12 quake struck the province over the weekend, killing eight people.
Despite over two weeks passing since the natural disaster struck, rescue efforts continue unabated. The Chinese are persevering through this tragedy, hanging onto hope and working hard to find survivors and rebuild their lives. Much of this hope and determination is being driven by the country's leadership.
Chinese premier Wen Jua-bao, who personally led rescue efforts for the first five days following the quake, famously told rescue workers: "Even if there is only a 1% chance (of survival), we must apply 100% effort." He was right. Even in the two weeks since the earthquake, rescue workers have still managed to find survivors, including children, buried under rubble living on raindrops.
Damages Likely to Exceed $10 Billion
The amount of people in China affected by this tragedy is significant, and the destruction is staggering. Along with the loss of life, there has been much destruction in the Sichuan Province -- homes, businesses, schools and roads have been destroyed. Damages are likely to exceed $10 billion.
The Chinese government is setting up a 70 billion yuan ($10.1 billion) fund to pay for reconstruction, and government departments have been told to cut spending by 5% to divert funds for rebuilding. Disaster-relief allocations reached 15 billion yuan ($2.2 billion).
Now while the total destruction in the area and reconstruction costs seem like a lot of money, $10 billion is barely a drop in the bucket in comparison to China's $3 trillion economy. So I'm not expecting the earthquake to have a significant impact on China's economic growth this year.
The earthquake has actually strengthened China's ties with its neighbors, as nearby regions like Taiwan and Japan have provided rescue teams and donations. I truly expect China to come out of this disaster stronger and for it to continue on its path to becoming an economic powerhouse.
To learn how you can profit from China's incredible economic growth -- the country is expected to grow over 8% for years to come -- join China Strategy today.
Robert Hsu
