Key Points

- A severe earthquake with 8.0 Richter scale hit China’s Sichuan on May 12th, which is the biggest earthquake in 32 years. This disaster not only brought severe physical damages but also damages to the people of China. The aftershock of this earthquake is expected to bring additional damages.

- Despite the severe damages in the lives of Chinese people and properties, China’s overall national economy will not be affected severely from the natural disaster.
1) There is a possibility of contraction of industrial production and private consumption due to the Sichuan earthquake. The effects, however, on China’s GDP growth, basis of strict economy policy and the stock market are considered to be insignificant since Sichuan’s share in terms of the total national economy of China is relatively low.
2) There is, however, a possibility that the pressure to raise price will be aggravated after considering the significance of Sichuan in terms of some food and energy production.

- The disaster’s effect on the Korean economy is conserved to be insignificant since it has minor effect on Chinese economy and the scale of Korea’s trade and investment towards Sichuan is very small.

- There is, however, a possibility of a price increase in food and raw materials with the upcoming restoration process. The event of the Sichuan earthquake should therefore be carefully examined since this may directly/indirectly affect Korea.

- The rate of investment in Sichuan is expected to accelerate due to restoration projects, in addition to the increase in fixed asset investments.

- China is likely to induce advanced technology in construction to be well prepared for such disasters like the Sichuan earthquake.
1) Korean businesses with strong human resources and competitiveness in technology should therefore show interest and actively participate in Sichuan’s restoration process.



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