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Posted on 04/27/2003 2:51:10 PM PDT by MadIvan

When China’s leaders turn left out of their residential compound in Beijing they instantly come to Tiananmen Square. As they shuttle across the vast expanse to emergency meetings on the Sars epidemic this week, they will be met with silence.

No more than a dozen visitors are now loitering in the world’s biggest urban space. The virus is emptying out the city. Up to one million people have fled Beijing and millions more are hiding in their homes to escape infection.

In their desperation, the leaders may recall how waves of bicycles (and later bodies) filled the government quarter in 1989. The democracy protesters in Tiananmen Square were, of course, dealt with in the standard fashion of authoritarian regimes. They were crushed. But how to deal with Sars? Tanks are no match for viruses; only efficient and credible governments are, and Beijing has shown itself to be neither.

The past few weeks have provided an extraordinary display of incompetence, obfuscation and obstructionism. Beijing’s attitude is summed up by the response to a hospital inspection by the World Health Organisation two weeks ago. To hide the scale of the Sars problem, highly infectious patients were packed into ambulances and driven around the city for hours until the WHO inspectors had left. Outraged doctors later leaked the story to journalists.

When the Government finally admitted the full extent of the epidemic, the populace panicked and Beijing became engulfed in its biggest political crisis since 1989 — bigger than the spy plane stand-off with the US two years ago, or the Nato bombing of the Chinese embassy in Belgrade, or various Taiwan crises. All of these enhanced the regime’s domestic power, if anything. Whether due to patriotism or propaganda, Chinese rallied around the crimson flag. The political impact of the Sars crisis is likely to go in the other direction.

Only weeks after the new leadership around President Hu Jintao entered office with promises of greater openness and concern for the disadvantaged, the Government secretively gambled with lives. Talk of political reforms and administrative restructuring at the recent National People’s Congress now seems ludicrous. As a result, public confidence has waned yet again, as has China’s international standing — just when Beijing had mended fences with the US. To his credit, Mr Hu sacked two officials last week and instituted new measures to fight Sars. But it may be too late to stop the economic damage. The full impact on GDP will take months to filter through, but already a nightmare scenario is emerging in the world’s fastest-growing economy.

Fear of coming into contact with the infected has shut down most business activity. Conferences are cancelled and public meeting spaces are closed. Retail sales, an economic mainstay, have collapsed and foreign investors, the driving force in industry, now shun the country.

Even more than in Western democracies, economic growth is key to Beijing’s political stability. After the upheavals of 1989, the Chinese leadership struck an implicit bargain with the people. If you accept that we hold power and that there won’t be free elections for another generation, then we will make you rich. In the past decade of accelerated economic reforms, Beijing was able to deliver on its promise. Colour televisions, fancy restaurants and mobile phones are ubiquitous in most parts of China now. Car ownership and international travel have become a middle-class staple.

This turnaround in the way most Chinese live was made possible by an economic growth rate officially recorded as 8 per cent per annum. That means China’s economy has more than doubled in size since 1989. Millions of workers laid off by inefficient state factories were able to find jobs in the booming private sector, which now makes up about half of GDP.

But if Sars were to push down the growth rate to, say, 4 per cent — considered more than respectable in the West — Beijing would face severe political turbulence. The halving of GDP growth is likely to hit the most productive parts of the economy hardest, since they are usually not cushioned by the Government. The millions of jobs recently created are just as easily lost again.

If Tiananmen Square were to fill up now with the unemployed and angry middle classes instead of students, the effects of this crisis could equal the political impact of the massacre in June 1989. Between 300 and 3,000 demonstrators died in and around Tiananmen Square at the time, according to estimates.

Sars, in recent weeks, killed more than 130 and the epidemic is nowhere near its peak. At the current infection rate — and experts believe it could accelerate as spring turns into summer — the virus may soon have claimed more victims than the tanks.

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