China now appears to be on the road to recovery after devastating winter storms hit large swaths of inland China, including areas that normally don't receive large amounts of snowfall. Given the parallels to the Hurricane Katrina crisis in the U.S., the Red Cat Journal thought it would be interesting to review some key comparisons between the two natural disasters:
|China's winter storm||Hurricane Katrina|
|Damage||US$7.5 billion||US$96 billion|
|Evacuees||1.7 million||1.1 million|
|Homes damaged or destroyed||Over 1 million||300,000|
|Official visits||PM Wen Jia-Bao to Guangzhou and Changsha||Bush to New Orleans|
|Industries affected||coal, auto||oil & gas|
|Power supply||17 of 31 provinces in brownouts||2.5 million without power|
|Troops deployed||500,000 soldiers, 1.6 million paramilitary||50,000 National Guard troops|
The table is based, with some of our own modifications, on a table in the Foreign Policy Blog. We believe the impact of the storms on China's economy is likely to be largely temporary. It is notable how the economic damage of the winter storms, at US$7.5 billion, has been estimated to be less than 1/10th that of Hurricane Katrina. Also notable is the massive amount of human resources, in the form of troops, China is able to deploy to help with disaster recovery.
Although the impact of the storms may not be long-lasting, it is possible that China's leaders may now review the efficacy of price controls as food and raw material shortages during the storm may have been exacerbated by the implementation of price controls. It also remains to be seen if China will continue with its stance of monetary policy tightening or if it will now loosen the reins, especially given economic weakness in the U.S.