The poultry aisle of a Beijing supermarket is a lonely place to be these days.
With 14 people dead and 61 reported cases of a new H7N9 strain of bird flu, the economic costs of what some fear could be China’s next pandemic have already begun: Falling sales of chickens and eggs, a run on traditional medicines thought to fight flu, travellers wondering if they should reconsider their plans.
Chinese authorities say all current cases appear to have been contracted through direct contact with birds, but warn of a much bigger health crisis if it’s found the virus can be transmitted between people.
In the meantime, there’s a new item to add to the already long list of food-safety scares in the country, as municipalities ban live-poultry sales and cull chickens where infections are found.
“My mom gave me a call two days ago and said not to eat any chicken or duck,” said Sun Yanxia, 18, a clothing shop assistant picking up vegetables and instant noodles at a supermarket on her lunch break late last week. “I watched the news a few days ago and saw the cases and the deaths. I feel a little afraid. I don’t want to get infected. My colleagues at work, when they go for lunch now, they don’t order any chicken dishes.”
They are not the only ones worrying, with infection spreading from a handful of eastern provinces to Shanghai, central Henan province and now Beijing. A Chinese agricultural association has now estimated damages to the poultry industry to 10 billion yuan, or about $1.6-billion, after just a week. KFC’s parent company, Yum! Brands Inc., warned avian flu would have a “significant, negative impact” on its China store sales, with same-store sales down 13 per cent in March.
Even a Hangzhou-based association of carrier pigeon enthusiasts has halted races and warned members to keep their birds caged until the danger passes.
“I think in these kinds of situations the indirect costs could be much larger than the direct costs,” said John Cai, director of the Centre for Health Management and Policy at the China-Europe International Business School.
The direct costs of testing, treatment and quarantine are easy to measure; harder to calculate is the impact on the agricultural industry, tourism and entertainment, as people become too afraid to fly on a plane, or go out to a movie or restaurant. Comparisons are already emerging of China’s last battle with a pandemic illness, the 2003 SARS crisis.
“The economic effects of a pandemic are expected to be high, but the magnitude will vary with the ease with which the flu is transmitted from person to person and the death rate,” said Li Wei, an economist at Cheung Kong Graduate School of Business. “If this bird flu is as bad as the SARS, its impact would be expected to be less provided that officials in China have learned their lessons in the SARS episode. So far it appears that officials are keeping the information flowing. And the flu does not seem to spread easily among people. But the situation is fluid.”
Already, a Hong Kong-based economist, Lu Ting of Bank of America Merrill Lynch, has said he will revise his prediction for China growth downward if the bird flu spreads, to 8 per cent in second quarter from 8.1 per cent now.
By comparison, SARS, in 2003, is blamed for pushing GDP growth down by two percentage points in one quarter.
Still, economists watching the mounting uncertainty say the costs are different this time. Unlike with SARS, they say, the government has been working hard to appear more open about developments; that, along with the rapid spread of information on Weibo, the Chinese micro-blogging service, helps alleviate some of the fear that drove hotel and flight cancellations in past outbreaks.
Health infrastructure for treatment and quarantine is already in place. And while a serious outbreak would hit travel, restaurant sales and the agricultural industry, there would be more investment in the health industry, and the mitigation of the impact on business through the use of technology, as in video-conferencing.
“How the government has handled this crisis is actually really good. It increases the confidence of the business community,” said Zhang Wei, a professor specializing in health care policy and management at Beijing University’s Guanghua School of Management.
He said China’s bigger companies are also catching on to the value of communication, by writing memos to employees reassuring them of reduced travel and better office ventilation to help alleviate their fears.