The November 2002 outbreak in China of a new form of atypical pneumonia, Severe AcuteRespiratory Syndrome (SARS) had widespread economic, political, and social effects on the PRCand presented a serious test for new PRC party leadership, named at the November 2002 PartyCongress, and for new central government officials named at the March 2003 meeting of theNational People's Congress. (1) Having firstminimized and tried to cover up the extent of the disease,PRC officials eventually were forced by circumstances to acknowledge the problem, apologize forfailure to be more forthcoming, and respond openly and aggressively to the outbreak. Thegovernment's handling of new SARS cases emerging in January 2004 differs markedly from itsearlier experience. As a result, some U.S. foreign policy observers have suggested that the initialcrisis of 2003 was a transformative experience for the new leadership that will have lastingimplications for the PRC's future and for its role in the world. One set of questions is economic. These include the direct costs of fighting the virus, the indirect costs to and implications for the country's economy because of lost business, and thenational budget implications of continuing to address the weaknesses that SARS revealed about thePRC's health care system. Social and political questions center around what the health crisisrevealed about the limits of central government power in an age when public pressure can forcechanges in Beijing's policies. Finally, the health crisis raised questions about the PRC's globalimage and role, including its responsibilities to international organizations such as the World HealthOrganization (WHO), the impact that Beijing's decision to obfuscate about the crisis may have hadon its credibility with its neighbors, and the potential implications of the crisis for PRC relations withHong Kong and Taiwan. This report will address the political, social, and economic questions confronting China as it continues to cope with the after-effects of the health crisis and emerging new health crises. Thisreport also will assess the implications of these questions for China's future and for U.S. policy. Thereport will be updated as events warrant. In November and December 2002, authorities in China's Guangdong Province began seeingcases involving a mysterious and contagious flu-like virus that PRC medical officials first describedas an "atypical pneumonia." As later press reports eventually reconstructed it, cases first appearedin the provincial cities of Foshan, Heyuan, and Zhongshan, spreading then to Guangzhou, theprovince's capital city. Although Beijing sent a delegation of medical experts to Guangdong onJanuary 20, 2003, to help provincial officials investigate the illness, government authorities madeno official mention of the mysterious cases, nor did official PRC media sources. When provincialgovernment officials finally acknowledged the mysterious pneumonia outbreak publicly in earlyFebruary 2003, they continued to be secretive and duplicitous about the extent of the illness, onlyperiodically making reluctant further disclosures about the outbreak. The Guangdong Provincial Health Bureau made the first official PRC announcement about the mysterious illness on February 11, 2003, after the outbreak had "become obvious" in the city,according to a senior Guangdong health official. (2) Taking the then unusual step of holding a pressconference, provincial health authorities reported that 5 in Guangdong had died and more than 300had become sick -- numbers that proved much understated by later calculations. Having revealedthe problem, the following day, on February 12, 2003, the official Xinhua News Agency announcedthat the mysterious pneumonia had been "brought under control"and no new cases had been reported. This remained the official story from the PRC government through mid-March 2003, even as theWorld Health Organization (WHO) issued a global alert on March 12, 2003, following newoutbreaks of a similarly described "atypical pneumonia" in Vietnam and Hong Kong. PRC officials remained reluctant to issue information throughout March 2003. Even so, onMarch 15, 2003, the WHO issued an unprecedented "emergency travel advisory," for the first timereferring to the illness as SARS and saying that its further spread to Canada, Singapore, and Europenow made it a "global health threat." According to WHO officials, it was only at this point that theChinese government began providing them with information about the February "atypicalpneumonia" outbreak in Guangdong which Beijing still maintained had been successfully dealt with. Even so, WHO reported that the PRC at this point still declined to provide biological samples, testresults, or even details about the courses of treatment used during the February outbreak. Severaldays later, on March 18, 2003, PRC officials admitted that the SARS outbreak was continuing inGuangdong, but maintained that it had not spread to other locations in China. On March 27, 2003,PRC authorities admitted that actually more than 800 people in Guangdong had become sick and 34had died, including 3 in Beijing -- the government's first admission that the illness had spreadbeyond Guangdong Province. It was not until April 2 that PRC officials allowed WHO investigatorsto visit the Guangdong SARS areas. (3) On April 4, 2003, the head of the PRC's Center for Disease Control issued an unprecedented public apology for the government's "poor coordination" of information about the health crisis. (4) OnApril 9, a prominent Beijing surgeon publicly disclosed that the government was continuingseriously to under-report cases of SARS in Beijing, and that the number actually was far more thanthe statistics of 22 existing cases in the city that the government had released that same day. By mid-April 2003,persistent rumors, international inquiries, and foreign press reports were bringingenormous pressure to bear on government officials, who were still reporting that SARS had beencontained in Guangdong and that only 15 more cases had been reported in Beijing, for a total of 37. WHO investigators publicly announced on April 16, 2003 that the international community did nottrust the Beijing city government's figures, and that the numbers Beijing was reporting did notinclude patients in military hospitals or those with suspected but unconfirmed cases. The New YorkTimes quoted one WHO infectious disease expert as saying that the real number of cases in Beijingmore likely was "in the 100-to-200 range now." (5) On April 18, 2003, China's new Premier, WenJiabao, threatened dire consequences for any government official who did not make full and timelydisclosure about SARS cases. On April 19, 2003, the Washington Post reported that PRC doctorswere disclosing that the previous week, on orders from the Beijing city government, authorities hadphysically moved more than 70 SARS patients out of hospitals to prevent visiting WHO medicalteams from finding them on their inspections. The real official turnaround in the crisis came on April 20, 2003, when PRC leaders made an evident decision to be more forthcoming about the SARS crisis. In a series of steps that manyobservers described as unprecedented in the history of the Chinese Communist government, PRCofficials that day held a nationally televised press conference in which they admitted that SARScases in Beijing actually were more than ten times the 37 cases officially reported up to that point,and that there were 339 confirmed cases and 402 suspected cases. Officials offered a public apologyfor their "leadership failure" in addressing the SARS crisis. Later that day, both the Minister ofHealth, Zhang Wenkang, and the Mayor of Beijing, Meng Xuenong, were removed from theirpositions, presumably for misleading the public about the extent of the health crisis. By April 27, 2003 -- only ten weeks after the initial announcement that a mysterious pneumonia outbreak affecting a few hundred people in Guangdong had been brought under control-- SARS outbreaks had been reported in 26 of the PRC's 31 provinces, the number of confirmedcases in Beijing alone had passed 1,100, and the central government had placed more than 15,000people in the city under quarantine. Further, the government cancelled the week-long celebrationsfor the May 1st holiday of 2003 to discourage widespread travel in China, and ordered the emergencyclosure of movie theaters, discos, churches, and other public places in Beijing. (6) Outside the capital,villages and towns with no recorded SARS cases began to put up roadblocks to isolate themselvesfrom potentially infected travelers. Although new daily PRC announcements showed that confirmedSARS cases were now increasing on a daily basis, WHO officials on April 29, 2003 again criticizedthe government for failure to provide more detailed information. Many citizens of Beijing refusedto venture outside their homes, often wearing protective face masks when they did so. Accordingto press reports, streets and public squares in the city were virtually deserted, and those businessesand stores that remained open had virtually no customers. By July 2003, the global transmission of SARS had virtually disappeared. On July 15, 2003, the U.S. CDC discontinued the distribution of its Health Alert Notices and lifted the last of its traveladvisories, reflecting that no new cases of SARS had appeared in more than 30 days. (7) Nevertheless, the international medical community warned that SARS may duplicate the pattern ofother respiratory diseases and recur seasonally, like the flu. Many pointed out that the SARSoutbreak of late 2002-early 2003 highlighted a number of serious weaknesses in the PRC's politicaland economic systems that PRC leaders were forced to address, particularly given the potential forother national health crises. Some felt that the act of addressing these weaknesses could have alasting impact on governance in the PRC. Since 1978, the pressures and demands of modernization have forced the authoritarian Chinesecommunist political system to change in important ways. These changes have been incremental andselective, so that the political arena in the PRC today has an oddly chimerical quality about it. Forexample, while much in PRC society is increasingly open, the process by which government andparty decisions are made is still a murky matter. A small number of senior leaders continues to makemost major policy decisions in closed sessions. They give little rationale to the public about whythey make a given decision, and no information about whether some leaders have dissenting views. Open and direct criticism, even when justifiable or well-intentioned, is often treated harshly as athreat to some greater good, such as social stability or public safety. (8) What one observer has referredto as "the culture of secrecy" surrounding the process at the top in the PRC extends also into thebroader socio-political arena. (9) On the other hand, while the party still reserves ultimate power to itself, the levers for exercising that power have weakened. Combined with the forces of globalization, the party'sinstitution of economic market mechanisms since 1978 has required more political flexibility andthe acceptance of greater local autonomy. More decision-making authority has devolved to variousgovernment bureaucracies and to provincial and local authorities, but this shift in power has not beenaccompanied by the creation of a supporting institutional infrastructure sufficient to regulatecommerce, control corruption, and coordinate laws and responsibilities at all levels of governance. Consequently, the universe of what effectively can be controlled by the core central elite today isseen to be shrinking, while the capacity of non-central actors to manage, influence, and interfere inday-to-day activities is seen to be expanding. The struggle of dealing with SARS highlighted thesestrains and contradictions in the PRC political system. One of the most evident consequences of the 2003 SARS crisis for PRC leaders was the harsh light it threw on the lack of transparency and accountability in government. SARS demonstrated thatmuch of the PRC government's standard operating procedure is ill-equipped to respond to awidespread public health crisis. Under PRC law, for example, the government has extensive powerto determine what information is a "state secret." and can impose severe punishments against thosewho reveal "state secrets." The definition of what are "state secrets" and who is entitled to knowthem is vague and arbitrary, as evidenced by the general description contained in Article 2 of thestate secrets law: "State secrets shall be matters that have a vital bearing on state security andnational interests and, as specified by legal procedure, are entrusted to a limited number of peoplefor a given period of time." (10) Further, accordingto some reports, a 1996 law, the text of which doesnot appear to be available, specifically states that serious infectious diseases shall be considered statesecrets unless and until the government makes an official public announcement about the disease. (11) Adherence to laws and regulations designed to keep unfavorable information secret, ostensibly for the purpose of protecting public safety, proved a damaging and counterproductive strategy in thecase of the SARS health crisis. It was, in fact, the government's failure to provide informationabout the initial outbreak that ultimately endangered public safety. In addition, as the disease beganto spread and more information about it became available, government efforts to "spin" the SARSstory began to appear clumsy and incompetent. The Party made many early mis-steps in 2003 that damaged its credibility. One early PRC state-run media account reported that the initial reports of a pneumonia outbreak were false, spreadby a pharmaceutical company trying to create a market for one of its anti-flu drugs. (12) Officialspublicly insisted that a mild pneumonia-like epidemic had occurred but had been "brought undercontrol." Authorities arrested and charged some people for "spreading rumors" that a mysteriouspneumonia had broken out in southern China. But confronted daily with demonstrable evidence ofthe disease's spread, the government's official line ultimately became untenable. Governmentleaders were confronted with the fact that more PRC citizens believed foreign pronouncements aboutthe spread of SARS in China than they did their own government's. In part to resuscitate the party'sand the government's ailing credibility, PRC officials opted for fuller disclosure. According tosome news reports, in addition to the Minister of Health and the Mayor of Beijing, dozens of otherofficials were fired, suspended, demoted, or otherwise disciplined for non-performance for what oneaccount referred to as "their slack reactions" against SARS. (13) Public pressure played a crucial role in finally forcing the government's hand. The very nature of the crisis helped serve this public pressure, since a threat posed by a disease is less responsive topolitical interpretation by the government than are other problems; one is either sick with amysterious pneumonia-like illness or one is not. Still, it took pervasive pressure from multiplesources to change the way the government responded to SARS, and at each step, observers notedongoing contradictions in the PRC political system. International Community. As a contagious disease, SARS was not a problem that could be confined to a limited physical area so that the PRCgovernment could shield it from public view. In the age of global travel, SARS transcendedgeographic borders, making it harder to hide from the international community. For example, inFebruary and March 2003, while PRC officials continued publicly to deny that China was havinga health crisis, travelers to Singapore, Canada, Hong Kong, and other countries were getting sickwith the mysterious illness. Epidemiologists from the WHO and from affected nations were ableto trace these cases back to contact with a particular location in or individual from the PRC. As theweeks went by, even though PRC officials publicly continued to insist that China was SARS-free,foreign organizations, governments, and business representatives began to act independently toprotect their people from exposure to SARS in China. Medical Community. In addition to international organizations and governments, pressure arose from what might be called an international"community of experts" -- meaning in this case medical personnel in the PRC who were inconsultation with each other and with their professional counterparts around the world. In theirefforts to diagnose and treat cases of the mysterious new disease, doctors from the PRC and otheraffected countries exchanged information with WHO investigative teams, various national Centersfor Disease Control, and others, reporting on what they were seeing in their own hospital wards. These avenues of non-governmental communication allowed medical investigators to make furtherindependent assessments about the veracity of pronouncements from PRC government officials. The most influential example of this reporting by medical experts involved the case of Dr. Jiang Yanyong, a prominent surgeon in Beijing, who disclosed on April 9, 2003, that based on what he andhis colleagues were seeing, the government was seriously under-reporting cases of SARS inBeijing. (14) It was this and other information thatallowed WHO and other international medicalexperts to question the Beijing government's official reporting on SARS. Medical expertise becamemore believable than the "correct" political line being circulated by the government. Technology and Communications. Domesticpressure on officials in Beijing was significantly enhanced by the rapid spread in recent years ofcommunications technology in the PRC. According to industry sources, 54.5 million PRC citizenshad access to the Internet by late 2002, while one-fifth of the PRC population of 1.28 billion -- orapproximately 250 million people -- had access to cellular phone service by early 2003. (15) Duringthe months of the 2002-2003 SARS outbreak, then, more PRC citizens than ever before hadindependent access to sources of information outside government control. According to newsaccounts, much of the information about the SARS outbreak was passed on almost instantaneouslythrough cellular phone text messages -- at times 40 million a day, according to one press report --a volume that was well beyond the government's ability to monitor or control. (16) Such messagesserved as primary sources of information as the crisis progressed for a public that was placingincreasingly less faith in the reliability of government pronouncements. The SARS case also demonstrated that despite the authoritarian nature of the PRC government and the extensive "reach" it had in its early years, power and authority, both within the CommunistParty and within the government bureaucracy, face new limits today. Having been forced intogreater transparency by acknowledging the extent of the 2002-2003 SARS crisis, Beijing seemedunable to respond with the pervasive power and control that once had been possible. Governmentofficials appeared unable to prevent mass migrations from SARS-affected areas, unable toreconstruct the route the virus was taking across provincial borders, and unable to control effectivelythe way the medical community in China was treating SARS patients. When it became apparent thatsome hospitals were turning away potential SARS victims who were too poor to afford treatment,the Beijing health department reportedly promised to pay all treatment costs for those unable topay. (17) Subsequent newspaper interviews withsome citizens suggested that this promise was greetedwith skepticism, (18) and news accounts continuedto carry stories of patients turned out of health carefacilities. The self-inflicted damage Beijing did to its own credibility did nothing to improve itscrisis management effectiveness. Some observers suggested that the degree of vulnerability the government felt in 2003 was demonstrated by Beijing's threat to execute people who violated quarantines or who spread theSARS virus. (19) Villages and townships tookindependent action not authorized or coordinated byBeijing, putting up barricades to keep travelers out in an attempt to isolate themselves from thespread of SARS. There were reports of riots in at least one location where a crowd suspected thatlocal school officials were turning an abandoned school into a SARS holding area. Even within the ranks of the government and party, Beijing appeared to have a hard time getting people to follow its program. At an emergency Politburo meeting on April 18, 2003, President andParty Secretary Hu Jintao reportedly "warned against the covering up of SARS cases and demandedthe accurate, timely and honest reporting of the SARS situation." (20) In late April 2003, the CentralDiscipline Inspection Committee was forced to warn party members, especially doctors and nurses,that they would be ousted if they left their posts. When threats proved insufficient to retain somehealth care workers, government officials announced that those dealing with SARS would get extradaily pay as an incentive. Role of the Media. While the PRC media enjoys greater freedom and vitality today than it has in the past, the SARS crisis demonstrated that the Partyand government still were capable of re-asserting control when the occasion demanded. Before mid-April 2003,the media in Guangdong and elsewhere in the PRC were forbidden to report on thecrisis, leaving the unofficial means of communication cited above the primary sources of publicinformation. According to one Hong Kong press report, the media in Guangdong were notifiedrepeatedly that they were not to report on cases of atypical pneumonia without specific officialauthorization. (21) At one point, the ban on reportingappeared to be lifted, resulting in a flood ofreporting in the official media, only to be reinstated later. The SARS crisis demonstrated the degree to which the media still does not perform the function of a disinterested observer to keep government honest. The style of investigative journalism commonin the West, while not unknown in the PRC, is in its infant stages. But the SARS crisis also high-lighted the factthat this may be changing. The PRC media increasingly are confronted withcontradictory priorities. They must compete against more widely available global media sourcesgoverned by different requirements of journalism than they themselves can freely follow. They faceincreasing competition, both domestically and abroad, for news coverage, readership, and funds --an increasing percentage of which are from advertising revenue rather than from the government. As a new member of the World Trade Organization (WTO), the PRC also has committed to openingits press and publication market to foreign companies. Consequently, PRC officials are undertakingpress reforms that are expected to privatize much of the national media and result in the demise ofmany non-competitive media organizations. (22) While problems in China's overall health care system and finances are addressed elsewhere in this paper, the 2003 SARS crisis demonstrated that PRC infrastructure and training mechanismswere ill-equipped to deal with a wide-spread public health emergency. The near non-existence ofthe epidemiological profession seriously hampered the PRC's ability to trace the progression of thedisease and isolate those who came into contact with infected patients. No effective system was inplace for emergency communication either within the medical community or to government healthofficials who needed to know about the emerging disease outbreak. When the first SARS caseappeared, the PRC's own Centers for Disease Control and Prevention (CDC) had been in operationfor less than a year, since January 2002. (23) According to one observer, the PRC Ministry of Healthhad allocated only 80,000 renminbi (equivalent to about $9,700) to the new Chinese CDC for thepurpose of monitoring epidemics. (24) Hospitalsrun by the People's Liberation Army (PLA), wheremany of the disease victims were treated, were described by WHO and other medical officials asnon-responsive to requests for cooperation and information. The rapid spread of the SARS virus raised concern among Chinese officials over the potentialnegative effects it could have on China's economic development. Maintaining healthy economicgrowth is viewed by the government as critical to maintaining social stability, especially as itattempts to restructure and reform inefficient sectors of the economy. The SARS epidemicthreatened to interrupt the high level of economic growth China has enjoyed over the past severalyears. The SARS crisis also generated new concerns (both domestically and internationally) overthe lack of health care services for a large share of the Chinese population living in rural areas andthe ability of China's public health care system to respond effectively to major nationwideepidemics. Chinese officials acknowledge that China's poor health care infrastructure poses a majorrisk to its future economic development. The Chinese government pledged to boost spending inorder to stimulate domestic demand, help economic sectors most affected by SARS, pay for the careof SARS patients who could not afford it, and to expand health care coverage throughout ruralcommunities. The economic effects of the spread of the SARS epidemic appear to have begun in March 2003 and intensified after the World Health Organization (WHO) issued warnings on April 7, 2003 againstnonessential travel to Guangdong Province and on April 16, 2003 against nonessential travel toBeijing and Shanxi Province. (25) Another blowcame after the Chinese government's April 20, 2003admission that the spread of the SARS virus was far more extensive than it had previously admitted. The immediate effect of these events was a sharp drop in air travel to and from China followed bywidespread cancellations by foreigners of tours and hotel reservations. (26) Many foreign businessrepresentatives postponed trips to China. A number of international meetings, exhibitions,conferences and sporting events were cancelled Fears over the disease began affecting consumerspending in many cities, as individuals sought to avoid crowded areas, such as shops and restaurants. In Beijing, recreational facilities, such as movie houses and health clubs in several cities wereordered shut down by the government in order to contain the virus. The Service Sector. Tourism appears to have been one of the hardest hit economic sectors in China. (27) The SARS virus led to a sharp drop inforeign travel to China in April-May, while domestic travel during the May Day holidays wassignificantly curtailed. This in turn impacted service industries catering to foreign tourists, foreignbusiness travelers, and domestic travelers, such as hotels, restaurants, caterers, tour companies, andlocal vendors. Chinese statistics indicate that the number of stay-over tourists fell by 42% in April2003 over April 2002 levels. In Beijing, the number of tourists dropped by nearly 94% in May 2003over May 2002 levels; (28) hotel occupancy ratesof 5-star hotels reportedly fell to 20% and some wereat zero. A group of scholars from the Peking University predicted that the 2002-2003 SARSepidemic ultimately would cost China's tourism industry about $16.9 billion. (29) China SouthernAirlines reported that its passenger traffic in May fell 83% year on year. (30) According to the OfficialAirline Guide (OAG), a leading source of information on international flight schedules, the numberof planned flights to and from China in June 2003, fell by 45% compared with June 2002, and thenumber of planned flights within China fell by 15%. (31) The Chinese government reported thatnational retail sales in May rose by 4.3% year on year, the lowest growth in 5 years; in Beijing retailsales for the month fell by 9.6%. (32) Gross Domestic Product (GDP). China has been successful over the past several years in maintaining rapid economic growth. Between 1979 and2002, real GDP growth averaged 9.3%; it grew by 8.0% in 2002. During the first quarter of 2003,real GDP grew was up 9.9% over the first quarter 2002, the fastest quarterly growth rate since 1997. The impact of SARS was largely felt in the second quarter when year-to-year real GDP growthslowed to 6.7%. However, by the third quarter, year-to-year real GDP surged by 9.1%. TheEconomist Intelligence Unit estimates that China's real GDP grew by 8.5% for the entire year --higher than 2002 growth. (33) This appears toindicate that overall, SARS had a relatively a minor andshort-lived impact on the Chinese economy as a whole in 2003. Foreign Trade and Investment. Many analysts feared that SARS would have a major impact on China's trade and investment flows. For example,one of China's largest bi-annual trade fairs in the city of Guangzhou (in Guangdong Province) wasclosed down after four days (in April 2003) due to SARS. The dollar level of purchase contractssigned ($3.3 billion) during that period was reportedly equal to less than one-fifth the total ($18.5billion) the fair generated in 2002. (34) Credit SuisseFirst Boston estimated that SARS would reduceorders for Chinese exporters by 10-15%. (35) Because it generally takes three to six months lag timebetween export orders and their production and delivery, the negative effects of SARS on China'sexports is not likely to be known until third and fourth quarter 2003 trade data are taken intoaccount. (36) In 2002, China's exports and imports grew by 22.3% and 21.2%, respectively. (37) During thefirst 11 months of 2003, Chinese officials reported that exports and imports rose by 32.9% and39.1%, respectively. (38) In 2002, China attracted$52.7 billion in foreign direct investment (FDI), up13% over the previous year. (39) China's FDI wasprojected to have hit about $53.5 billion in 2003(up by 1.5%), an indicator that SARS may have temporarily slowed the growth of FDI in China. However, contracted FDI for 2003 was up by 39% over the same period in 2002, an indicator thatactual FDI will likely pick up in the near term. (40) The Economist Intelligence Unit projects FDI inChina will rise to $57 billion in 2004. Production and Employment. Little information has surfaced as to the employment and effects of the 2002-2003 SARS outbreak. Press reportsindicated that only a few foreign firms in China experienced production disruptions due to SARS. (41) Analysts had warned that precautions taken to avoid spread of the virus and delays in visits to Chinaby foreign business representatives would impact work and deliveries over the longer term. Inaddition, several foreign companies reportedly delayed the launching of new products, opening newplants, or starting new joint ventures. (42) ExportDevelopment Canada contended in May 2003 thatthe SARS outbreak was having a significant impact on millions of small-and medium-sizedenterprises and threatened to sharply increase unemployment in urban areas within a few months. (43) One major group that has been acknowledged by Chinese officials to have likely been significantlyaffected by the SARS outbreak is China's large migrant worker population, estimated to numberover 80 million people. According to Chinese government estimates, 5.5 million migrant workersfled urban areas early in 2003 because of SARS. (44) The exodus led to labor shortages in some cities,but the main impact was expected to be on rural incomes (as many migrant workers transmit part oftheir incomes back home). China's Xinhua News Agency cited Chinese analysts who estimated that migrant workers would lose $4.8 billion by the end of the year. (45) Another analyst predicted that theearly 2003 SARS outbreak would reduce rural incomes by 1.5 to 2.0 percentage points and wouldcause the urban-rural income gap to widen. (46) Public Finance. The 2003-2003 SARS outbreak likely had a significant effect on the PRC's public finance system. First, tax revenues suffered fromthe effects that SARS had on economic activities. A Chinese government tax official estimated thatthe 2002-2003 outbreak would cost the government $2.4 to $3.6 billion in lost revenues. (47) Second,the Chinese government pledged to provide extensive tax incentives, tax cuts and fee reductions(estimated at costing the government $1.2 to $2.4 billion) for sectors most affected by the 2002-2003outbreak. Third, the government pledged to spend $725 million to fight SARS (including providingfree medical services to needy farmers and urban workers) and an additional $423 million to improvenationwide health care coverage. (48) Finally, Chinacontinued to boost government spending, suchas on infrastructure development, in order to offset the negative affects of SARS. These factorslikely put new strains on central and provincial budgets. (49) According to the World Bank, China'sgrowing public debt, which, as a share of GDP has risen from 11.4% in 1997 to 25.3% in 2002, ishampering the ability of the government to devote resources to social sectors. (50) The SARS contagion focused new attention on China's public health system for a variety of reasons. First was the concern that the lack of a comprehensive health care system would allow SARS and other diseases to spread throughout the country unchecked. This was especially ofconcern when millions of migrant workers returned home due to the SARS outbreak who might havespread the virus throughout China, resulting in a social and economic disaster. Â Second, the spreadof the disease raised new concern over the growing disparity in health care insurance and servicesavailable to urban and rural workers. The lack of health care and possibility of rapidly spreadingdisease also raised concerns that foreign investors would find the PRC a less attractive destinationfor FDI. Relatedly, a number of Chinese and foreign analysts contend that the poor state of China'shealth care system poses a long-term threat to China's future economic development. (51) When the Chinese Communist Party took control of China in 1949, it sought to establish a comprehensive health care system for the entire nation. During this period, most sectors of theeconomy were taken over by the government. Workers were provided basic health insurance by theiremployer -- the government. In urban areas, medical bills were paid for by their work units, whilein farming communities, collectives helped pay for medical expenses. Government control over thecountry's medical system through subsides and price controls kept medical costs low for mostworkers. One major initiative by the government was to send an army of "barefoot doctors,"individuals with basic medical training, to rural areas in order to provide health care to peasants. As a result of these policies, nearly 90% of the population (nearly all urban residents and 85% of therural population) received basic health care. (52) According to the World Bank, prior to 1949, China'spopulation was among the least healthy in the world, but after significant investment in heath carehad been made, the PRC experienced dramatic improvements in health conditions, such as increasedlife expectancy (which rose from 40 years in 1950 to 69 years in 1982). (53) The stage was set for the decline of the health care system in 1979, when the PRC launchedseveral economic reforms. The central government gradually dissolved the collective farmingsystem and initiated price and ownership incentives for farmers. Additional reforms followed instages that sought to decentralize economic policymaking in several economic sectors. Economiccontrol of various enterprises was given to provincial and local governments, which were generallyallowed to operate and compete on free market principles, rather than under the direction andguidance of state planning. State-owned enterprises were restructured and reformed, laying offmillions of workers. (54) Since 1979, a major objective of PRC leaders has been to reduce the financial burden posed by China's "iron rice bowel" system of cradle-to-grave benefits, including health care. As part of thisobjective, the government has substantially reduced its involvement in the health care system andhas essentially sought to privatize health care (or make it the responsibility of local governments torun programs on their own). Workers are now encouraged to obtain health care insurance on theirown, and many hospitals, clinics, and health care workers operate on a for profit basis. This policyhas led to a severe decline in the availability of affordable health care for a large portion of China'spopulation, particularly those living in rural areas. It is estimated that in 1978, about 20% of thenational health budget was spent on rural areas, but this figure had been slashed to 4% by the mid1990s. (55) Today, it is estimated that less thanone-tenth of China's 900 million rural population haveany form of health insurance. It is often said in rural China that the fastest way to fall into povertyis to see a doctor. Many individuals needing health care either avoid it because they can't afford itor end up having to liquidate their entire family's assets to pay their medical bills. (56) An investigationsponsored by the Chinese Ministry of Health found that in 1993, 59% of patients in rural areasrefused to be hospitalized for proper treatment because their families could not afford to pay for theservice; by 1998 that rate climbed to 65%. (57) Thecentral government has sought to control risingmedical costs by putting mandatory price controls on certain procedures. However, in order to makeup for financial losses resulting from these controls (and to earn a profit), hospitals and clinics oftenorder expensive medical tests and drugs for their patients. These conditions became particularly troublesome to PRC policymakers in their efforts to contain the spread of SARS: they feared that individuals infected with SARS would avoid seekingmedical care because of concerns over costs and therefore would quickly spread the disease acrossthe country. As a result, the government pledged to provide free medical care to all those infectedwith SARS who could not afford it. The SARS epidemic ultimately may give an added boost toplans that reportedly have been underway by the PRC government since October 2002 to establishbasic health care insurance for the rural population and to develop new schemes for attractingfunding and trained personnel for medical care facilities in rural areas. (58) Some policy observers suggest that a number of PRC actions and decisions in the past yearillustrate that the government has made significant policy changes since the 2003 SARS outbreak. The PRC government was seen to be trying to address the more egregious weaknesses the crisisrevealed about the nation's health care system. In early May 2003, the Chinese Center for DiseaseControl and Prevention (CCDCP) announced it would establish a National SARS Reporting System,using high-performance computer servers donated by Sun Microsystems, a U.S. company, to greatlyimprove Beijing's ability to monitor and analyze cases of SARS and presumably other diseases. (59) The new reporting system went into operation on November 5, 2003, initially connecting 13,000provincial and county hospitals to a single SARS medical information center. According to astatement issued then by Li Liming, the CCDPC Director, up to 20,000 users will eventually haveaccess. (60) Some maintain that PRC decisions and actions early in 2004 also suggest that a new if limited appreciation for transparency and accountability in government has begun to influence Beijing'sdecisions. In January 2004, the PRC Ministry of Public Security announced that, in order "topromote transparency of police affairs," local and provincial police departments must begin to holdregular press conferences and must file immediate media reports as events of public interest occur. (61) The PRC government duly announced the emergence and confirmation of new SARS cases inJanuary 2004 -- the first in China since spring of 2003. In Guangdong, where the first new caseappeared, provincial officials immediately ordered the extermination of the province's 10,000captive civet cats -- a dinner table delicacy in southern China and suspected animal source of theSARS virus. The PRC government also approved and solicited volunteers for human trials of a newexperimental SARS vaccine developed by PRC doctors. (62) But other observers have been more critical of the PRC government and maintain that thelessons learned after SARS are not pervasive. They see significance in the fact that PRC officialsquickly lifted a brief ban on the sale for food of exotic animals -- thought to be transmitters ofSARS to humans -- once again sending the animals into the food chain. (63) They point out that lessthan a week after the Ministry of Public Security mandated police departments to hold pressconferences and issue media reports on matters of public interest, police detained and held forquestioning employees of a PRC newspaper that was the first to report on the new SARS cases. (64) But critics see special cause for concern in the PRC's classically secretive response to a new anddeadly outbreak of avian flu in Asia in January 2004. Avian Flu. In 1997, an avian flu virus in Hong Kong's domesticated poultry population for the first time jumped directly from its traditional animalspecies to humans, infecting eighteen people in the territory and killing six. The Hong Konggovernment responded aggressively, in three days exterminating its entire poultry population of 1.5million birds. Isolated outbreaks of human infection from avian flu have recurred annually sincethen. By January 2004, it became evident that another avian flu outbreak was occurring throughout Asia, but on a much wider scale. Appearing nearly simultaneously in multiple Asian countries, theoutbreak of the deadly "H5N1" avian flu virus already had led to 11 human fatalities by January 29,2004, raising fears that the virus could become a global disaster if it adapted sufficiently to spreadthrough human contact. On January 27, 2004, a WHO official stated that a "staggering" numberof birds, both migratory and domestic, were infected with the virus in at least 10 Asian countries. (65) By late January 2004, Thailand alone hadexterminated more than 10 million chickens. (66) OnJanuary 27, 2004, the PRC became the tenth country to acknowledge ongoing outbreaks of avian fluwithin its borders. PRC officials confirmed three outbreaks: flocks of ducks in Guangxi Province;ducks in Hunan Province; and chickens in Hubei Province. Some critics have seen the PRC's initial actions in the avian flu outbreak as a return to the secretive methods used in the early 2003 SARS outbreak in China. As in the 2003 SARS outbreak,they say, PRC officials denied any avian flu outbreak for months despite anecdotal reports to thecontrary. On January 29, 2004, an official from a global organization monitoring animal diseaseoutbreaks said that it had been pressing Asian governments since November 2003 for informationon reports of avian flu, and that it had received no reports from the PRC. (67) Much international speculation has occurred since the 2002-2003 SARS outbreak about thelonger-term implications that this crisis, the avian flu outbreak, and others like it may have for thePRC and the Chinese Communist Party. One view is that the initial SARS crisis was a decisiveevent in the PRC that is likely to have lasting longer-term consequences for the government and theparty. Less certain is what those projected consequences will be, and what lessons PRC leaders havelearned. Some observers believe that the Party will be able to reinterpret the SARS or avian fluoutbreaks so that any leadership failings will be edited out of the collective memory. Observers ofthe PRC scene will be following closely a number of key areas where the official government'sreaction to emerging health crises could offer clues to future governance and policy in the PRC. For the PRC. In previous years there have been other known crises involving leadership cover-ups and government failings, the blame for which hasbeen largely contained at the local or regional level. These cases have included mass food-poisonings(both accidental and deliberate), contaminated milk for school children, fireworks factory explosions,mining disasters, and other instances involving official malfeasance, incompetence, or poorjudgement. Given the nature and extent of the SARS crisis, however, Communist Party and centralgovernment officials were forced publicly to make fuller disclosure, and in doing so to embraceseveral radical concepts they had not addressed before: the right of the public to know aboutinformation that directly concerns their daily lives, and the need for government to hold officialsaccountable for their mistakes and failings. Neither concept has been an endemic feature of PRCgovernance. Some observers have speculated that because of this, SARS has sewn the seeds for longer-lasting changes in the way PRC officials operate. They point out, for example, that prior to theSARS outbreak, public officials and Party members lost their jobs generally for reasons of politicalrivalry or if they were involved in widely-known corruption scandals. In contrast, during the SARSoutbreak two relatively senior officials were sacked for what amounted to poor job performance --for covering up SARS cases or mishandling the consequences of the outbreak in some way -- andsome reports suggested that hundreds of other low-level officials were fired. (68) The implication isthat public expectations for competence and accountability in government may have been raised toa new level by the SARS crisis, and that the government will be forced by those expectations to bemore forthcoming in the future. They see an example of this greater accountability in the publicannouncement by Beijing in May 2003 that 70 sailors had died in an accident aboard a PRCsubmarine the previous month, at the height of the SARS outbreak. In the words of one PRC scholarcommenting on the government's response to the submarine accident, "This whole [submarine]affair has been a breakthrough for openness." (69) The incident was the worst publicly acknowledgedmilitary accident in PRC history. According to this viewpoint, there also is evidence that SARS may put pressure on PRC officials in the future to re-think the current restrictive definition of "state secret" that criminalizesthe sharing of information about serious health epidemics. Already, some point out, the governmentappears to have realized that the system now in place provides key dis-incentives for sharingunpleasant information. To address this, in the wake of SARS, PRC judicial organs re-interpretedexisting laws to make more explicit the requirement that public health officials should immediatelydisclose the existence of health threats. (70) According to reports, the central government also has beenworking on a "freedom of information act," expected to be enacted later in 2004, that willdramatically reduce government secrecy while empowering the public to obtain more informationand requiring governments to disclose what information the government has. (71) But other observers are less optimistic that the sacking of high-level officials during the SARS outbreak suggests a change in the perception of official accountability, pointing out that seniorofficials have been sacked before in the PRC for political reasons. (72) Some dismiss the publicitysurrounding the submarine accident as a matter of official self-defense, judging that PRC leadersmay have felt they could not afford to be "scooped" a second time by the international media. Further, some observers maintain that while the SARS experience might prompt some PRC leadersto argue for more political transparency, it may reinforce for others the utility of more heavy-handedtactics such as quarantines and arrests for "rumor-mongering." They say that officials appear lesslikely to have opted for openness in addressing the current avian flu outbreak in 2004, perhapsbecause the outbreaks are still isolated enough as to lead officials to expect they can controlinformation flow. Critics also are especially troubled that in the immediate aftermath of the 2002-2003 SARS outbreak, official PRC media revealed that there were 107 cases in which Public Security Organsinvestigated and punished people for "spreading rumors" about SARS through the Internet andmobile phone text messages. (73) In addition, criticssay that another judicial re-interpretation in May2003 contains one of the more draconian measures to come out of the SARS crisis -- a provisionthat anyone intentionally spreading a dangerous disease could be subject to life imprisonment or tothe death penalty in the future. (74) These observerssee this as evidence that the official response tocrises was not changed all that much by SARS, and they fear that such punitive responses will alsoprevail in the avian flu case and in other potentially dire public health threats. Finally, the SARS epidemic appears to have focused new attention on a domestic political debate in the PRC over the wisdom of a long-standing basic policy (begun by Deng Xiaoping andclosely associated with the Jiang Zemin faction) that economic growth is the highest national priorityand must be pursued at any cost. The weaknesses that SARS revealed about the poor health caresystem in the PRC appeared to reinforce those who argue that the country can no longer postponethe development of important public infrastructures, such as public health care, hygiene, andeducation, for the sake of pursuing continued rapid economic development. Such a debate is likelyto grow in the presence of avian flu, which involves massive potential economic costs to the PRC'spoultry industry. For Hong Kong. One potentially far-reaching implication of the 2003 SARS crisis involves Hong Kong, the former British colony now under PRCsovereignty. Hong Kong struggled with its own deadly SARS outbreak in the first half of 2003, andit has considerable experience with the avian flu virus. (75) Under Sino-British agreements reached inthe 1980s, Hong Kong was granted autonomy to run its own affairs without PRC interference. (76) While the initial political transition has gone smoothly, Hong Kong's relationship with its newsovereign remains uneasy. Cynics about the PRC's promises of autonomy claim that Beijing issubtly interfering in Hong Kong's affairs, mainly by assuring that political pluralism is artificiallyrestricted. Such views, combined with Hong Kong's unique political situation, place special strainson Hong Kong and PRC government officials. The addition of SARS to Hong Kong's political andeconomy troubles in 2003, for instance, worsened the already low approval rating of C. H. Tung,Hong Kong's Beijing-approved Chief Executive, which then reflected poorly on Beijing. Some saythese Hong Kong sentiments were a key factor prompting massive numbers of Hong Kong citizensto become more politically active in mid-2003 and into 2004. (77) Many felt that the SARS crisisemphasized the different approaches of the two governments -- the PRC's secretiveness and HongKong's openness -- and claimed that this emphasized the importance of Hong Kong autonomy. Other Hong Kong observers attributed the early lack of information on SARS directly to Hong Kong's special political circumstances, saying that "contact has been deliberately kept to a minimum,mostly to protect Hong Kong's political independence." (78) These restrictions made it easier for PRCofficials to not communicate with Hong Kong on the extent of the SARS outbreak. The remedy,they claimed, would be to facilitate communications and lower barriers to bring Beijing and HongKong, closer together. For Taiwan. With its own cases of SARS in 2003 and avian flu in 2004, Taiwan sees emerging health crises in Asia as having broader politicalramifications for its international position and for its relations with Beijing. The PRC continues toblock Taiwan's bid to join the WHO. Without separate membership in WHO, Taiwan has no officialaccess to international disease eradication efforts or sources of information. (79) Even as the SARScrisis was underway, for example, PRC leaders continued to block any international effort to giveTaiwan unofficial "observer" status in the WHO, claiming that Taiwan is a part of China and thusdoes not legally qualify for any separate or independent status in the WHO. (80) PRC authorities didconsent to a WHO team visit to Taiwan to investigate SARS early in May 2003, and the PRC raisedno objections when Taiwan scientists were invited to attend a two-day WHO SARS conference inKuala Lumpur on June 17-18, 2003. But generally, the PRC continues to insist that any Taiwanhealth official wishing to take advantage of WHO's medical expertise should do so only as part ofa PRC delegation. Some feel that the PRC's objection to WHO help for Taiwan allowed Taiwan's President, Chen Shui-bian, to gain political mileage for his ongoing reelection campaign by claiming that the PRCdidn't care about the health of the 23 million people on Taiwan. (81) In addition, Beijing's own cover-up of SARS and its initial reluctance to ask for WHO assistance appeared toweaken the long-standing argument of Chinese leaders that the PRC can responsibly represent Taiwan's healthinterests in the WHO. Finally, the fatality rates associated with the 2003 SARS outbreak, therecurrence of the disease in 2004, and the implications of the 2004 avian flu outbreak appear likelyto reinforce the already strong support of U.S. Members of Congress for Taiwan's WHOmembership. U.S. foreign policy specialists are confronting the lingering political and economic consequences that global health crises in the PRC could have for U.S. policy and for U.S.-Chinarelations. The 2003 SARS outbreak and the emerging 2004 avian flu outbreak demonstrate thatincreasing pressures are working on the authoritarian PRC system, pressures involving greater publicdemand for information; increasing government vulnerability to domestic and international opinion;the PRC's growing "buy-in" into the international system; and the continually closer link betweenall these things and the PRC's predominant goal of rapid economic growth. Some American observers believe that new public demands in the PRC are likely to emphasize funding for domestic social services -- public health, the quality of medical care, education, andother programs -- and could lead to a lesser emphasis on military spending. Some in this group alsosee the crisis as having reinforced for PRC leaders the importance of communication, cooperation,and transparency in confronting issues that transcend national borders, and they view thesereinforcements to be in U.S. interests. They suggest that new opportunities have arisen forgovernmental and private-sector Sino-U.S. cooperation -- in areas such as medical research, publichealth services, technological database creation -- and that the U.S. government should encourageand facilitate these exchanges as a matter of policy. For these observers, the glass is half full. For another group of observers, the glass is half empty. This group points out that the initial inclination of PRC leaders, both in the SARS crisis and the emerging avian flu outbreak, was to besecretive and heavy-handed, and that only by a combination of extraordinary circumstances andpressures did the PRC opt for greater openness. They focus on the harsh aspects of the PRC'sresponse -- the arrests for disseminating information, the imprisonments for "rumor-mongering,"the central government's swift crackdown on the media. They also find concern in the more fragileaspects of the PRC's response -- the inability to inspire public confidence or limit the disease'sspread by more effective control of population movements. They find fault with the PRCgovernment's instinct for self-protection and non-disclosure, which they say increased the risk toother countries and proved that the PRC is not a "good neighbor." The United States, they say,should remain wary of PRC motivations and cautious in dealing with PRC leaders. 01/20/03 -- A team of health experts from Beijing arrived in Guangzhou to investigate reports ofa mysterious flu-like illness. 02/09/03 -- A second team of health experts from Beijing was sent to Guangzhou. Meanwhile,reports of a mystery killer flu-like disease began circulating on unofficial Chinese internet sites andthrough cell-phone text messages. 02/11/03 -- The first official public mention of a respiratory illness outbreak. TheGuangdongProvincial Health Bureau held an unprecedented press conference to say that an "atypicalpneumonia" had swept the province in late 2002 and early 2003, killing 5 and sickening 305. Guangdong media began extensive reporting on the illness. 02/12/03 -- The official Xinhua News Agency announced that the flu outbreak inGuangdong hadbeen "brought under control." This remained the official PRC story through mid-March 2003. Butunofficial reports continued to circulate that people were getting ill. 02/18/03 -- The PRC's Center for Disease Control and Prevention announced that it hadidentifiedchlamydia as the cause of the mysterious illness. 02/23/03 -- The Guangdong party secretary again banned the media from reporting on thepneumonia outbreak. 03/10/03 -- The Chinese government first asked WHO for help in identifying the cause oftheGuangdong atypical pneumonia outbreak. 03/12/03 -- WHO issued a global health alert following new outbreaks of an "atypicalpneumonia"in Vietnam and Hong Kong. 03/15/03 -- WHO issued a rare emergency travel advisory for the illness it now referred toasSARS. While issuing no travel restrictions, WHO said that the spread of SARS to Canada,Singapore, and Europe made it a "global health threat." The PRC government began providingWHO with the first sketchy information about the earlier outbreak in Guangdong. 03/23/03 -- A team of WHO experts arrived in Beijing hoping to investigate the SARSoutbreakin Guangdong that the Chinese government said had died out by itself after sickening 305 and killing5. 03/24/03 -- Scientists at the Atlanta Centers for Disease Control (CDC) announced theysuspectedthat the SARS virus was a brand new coronavirus, previously unknown in either humans or animals. 03/27/03 -- WHO issued new SARS-related guidelines for travelers, recommendingscreening ofair passengers departing from affected areas. 03/27/03 -- PRC officials admitted that more people in Guangdong had contracted SARSthan hadbeen previously revealed. The new figures were more than 800 had become infected and 34 haddied, including 3 in Beijing -- the first official admission that the disease had spread beyondGuangdong. 04/01/03 -- Chinese officials began to issue daily -- rather than monthly -- reports to WHOon theSARS outbreak. 04/02/03 -- The PRC government first allowed WHO investigators to go to Guangdong toinvestigate the earlier SARS outbreak, and state-run media began to report on instances of SARS. WHO began recommending that people postpone non-essential travel to Guangdong Province andto Hong Kong. 04/03/03 -- In his first news conference since the SARS outbreak, PRC Health MinisterZhangWenkang disputed the WHO travel advisory to China and denied the PRC government had delayedreleasing information to the public about SARS. 04/04/03 -- U.S. Health and Human Services Secretary Tommy Thompson reported that PRCHealth Minister Zhang Wenkang had pledged increased cooperation with the United States tocombat SARS. 04/04/03 -- The U.S. Government suspended U.S. Navy ship visits to Hong Kong andSingaporebecause of concern about SARS transmission. 04/04/03 -- Speaking at a news conference, Li Liming, director of the PRC's Center forDiseaseControl issued an unprecedented public apology for failing to inform that public about the emergingSARS crisis. 04/09/03 -- A letter written by Dr. Jiang Yanyong, a prominent semi-retired Beijing surgeon,disclosed that the PRC government was seriously under-reporting cases of SARS in Beijing. 04/11/03 -- Party Secretary Hu Jintao went to Guangdong to visit SARS infected areas. 04/13/03 -- Premier Wen Jiabao, presiding over a special PRC State Council meetingdevoted tothe SARS crisis, acknowledged for the first time that the illness was a "grave" crisis for China andwas continuing to spread. 04/14/03 -- The U.S. Centers for Disease Control announced they had independentlydecipheredthe SARS virus genetic blueprint, and it was virtually identical to the SARS genetic blueprintrevealed the previous day by Canadian researchers. 04/17/03 -- WHO officials told PRC officials they did not trust the Beijing city government'sreported SARS figure of 37 cases, noting that this figure excluded SARS patients in military-runhospitals or unconfirmed cases. The New York Times quoted one WHO expert as saying that the realnumber in Beijing more likely was "in the 100-to-200 range now." 04/17/03 -- PRC leaders held a special Politburo meeting on the SARS crisis at whichdecisionsreportedly were made to stop covering up the extent of the disease in China. 04/18/03 -- PRC daily newspapers reported that President Hu Jintao had ordered all Partyandgovernment entities to launch a campaign against SARS. Premier Wen Jiabao publicly threateneddire consequences for any government official that did not quickly disclose SARS cases. 04/19/03 -- The Washington Post reported Chinese doctors were disclosing thatthe previous week,on orders by the Beijing city government, authorities had physically moved more than 70 SARSpatients out of hospitals to prevent WHO medical teams from finding them. The annual CantonTrade Fair in southern Guangdong Province was cut short having produced only $3.31 billion insigned contracts, less than 20% of the previous year's total. 04/20/03 -- PRC officials held a nationally televised press conference to offer a publicapology,admitting that SARS cases in Beijing had been under-reported and that there were 339 confirmedcases and another 402 suspected cases in Beijing, not 37 confirmed cases as previously stated. PRCleaders also fired two senior officials for covering up the extent of the crisis -- the first in a seriesof such firings -- and announced that a national week-long May holiday would be reduced to oneday to deter travel. 04/20/03 -- PRC state news media announced that Health Minister Zhang Wenkang andBeijingMayor Meng Xuenong had been stripped of their Party posts. 04/21/03 -- Liu Qi, Beijing's Communist Party Secretary and a Politburo member, publiclyapologized for his "leadership failure" in handling the SARS crisis. Chinese newspapers, up to nowmuzzled by PRC leaders, suddenly began extensive reporting on SARS. 04/22/03 -- The Beijing school board announced that all schools in the city would be closedfor twoweeks beginning April 24. 04/23/03 -- WHO expanded its April 2 travel advisory to include non-essential travel toBeijing,Shaanxi Province, and Toronto, Canada. 04/24/03 -- According to The Washington Post , the State Council announcedit was budgeting $2.5billion to help the poor pay for SARS treatment. 04/26/03 -- According to news reports, President George Bush initiated a call to PresidentHuJintao to offer U.S. support and assistance in fighting the SARS outbreak. 04/27/03 -- Taiwan banned entry to citizens from the PRC, Hong Kong, Canada, andSingapore,and announced that Taiwan citizens returning home from those countries must be quarantined forten days. 04/27/03 -- Residents of Chagugang, near Tianjin, vandalized a school being turned into anobservation ward for people exposed to SARS patients. The government cancelled the projectbecause of the strenuous opposition. 04/28/03 -- The Asian Wall St. Journal reported that Wu Yi had been namedthe PRC's newMinister of Health. WHO declared that the SARS outbreak had been contained in Vietnam and hadpeaked in Toronto, Singapore, and Hong Kong. 04/29/03 -- WHO officials criticized the PRC government for continuing to beunforthcoming withfurther details about the Beijing SARS cases, including locations of patients and how they wereinfected. Beijing authorities reported over 1,100 confirmed SARS cases in the city, and that SARSoutbreaks had now extended to 26 of the PRC's 31 provinces. The Beijing city government orderedthe emergency closure of movie theaters, discos, churches, and other public places in the city. 04/29/03 -- At the invitation of the Thai government, Premier Wen Jiabao was invited tojoinleaders from the ten-member Association of Southeast Asian Nations (ASEAN) in an emergencysummit meeting in Bangkok on the SARS crisis, agreeing to establish a regional information-sharingnetwork. The PRC is not an ASEAN member. 04/30/03 -- The Asian Wall St. Journal reported that more than 100 PRCscholars had signed anInternet petition urging the government to honor its pledge to pay for SARS treatment for thoseunable to afford it. Liu Qi, a member of the Politburo, inspected Xiaotangshan, a new emergencyfacility Beijing was hastily building specifically to treat SARS patients. 05/01/03 -- The PRC halted trading at the Shanghai and Shenzhen stock exchanges becauseofSARS. 05/03/03 -- Under heavy international pressure, the PRC broke precedent and agreed to allowaWHO mission to Taiwan -- not a WHO member -- to help authorities there combat the SARSoutbreak. 05/03/03 -- The world soccer association announced that because of SARS, it was movingtheWomen's World Cup tournament, scheduled to be hosted by China from September 23-October 11,2003, to the United States. As compensation, China was promised the 2007 quadrennial event. 05/05/03 -- The Hong Kong Government announced it would establish a special regionalmedicalsurveillance center to monitor future disease outbreaks, and that it would ask for cooperation fromGuangdong Province. 05/06/03 -- U.S. Secretary of Health and Human Services Tommy Thompson spoke byphone withPRC Health Minister Wu Yi on further U.S.-China cooperation on SARS. 05/08/03 -- WHO further expanded its April 2 and April 23 travel advisories, now recommendingthat people also postpone non-essential travel to Taiwan and to Tianjin and Inner Mongolia in China. Also, the U.S. Centers for Disease Control (CDC) issued a travel advisory for mainland China. 05/08/03 -- U.S. Ambassador to China Clark Randt announced a donation of $500,000 totheChinese Red Cross to help purchase medical supplies to help combat SARS. 05/14/03 -- According to the Washington Post , state-run PRC newspaperspublished a governmentdecree threatening criminal punishments for government and health officials who delayed or falsifiedreporting on SARS statistics. 05/16/03 -- The Associated Press reported that China's Supreme People's Courthad said that those"deliberately spreading" SARS "might be executed." 05/17/03 -- WHO announced a travel advisory for Hebei Province in China. 05/21/03 -- The CDC issued a travel advisory for Taiwan. 05/23/03 -- WHO lifted travel advisories for Hong Kong and Guangdong Province, China,saying"the outbreaks in Guangdong and in Hong Kong are being contained." WHO advisories for otherareas in China remained in place. 06/01/03 -- A Chinese language Hong Kong Journal ( Hong Kong Chien Shao )carried a translationof what it said was a "top secret" PLA military circular, "Central Military Commission and PLAGeneral Political Department Issue Urgent Circular on Fighting Atypical Pneumonia (Top Secret)." According to the journal, the circular equated the fight against SARS with "the high plane of life anddeath of our party...." 06/04/03 -- The CDC downgraded its previous travel advisory to Hong Kong to a travel alert--grounds for health concerns, but not a caution against travel. 11/05/03 -- The PRC began a National Reporting System on SARS with the goal of linkingthenation's medical facilities to a single SARS information center. 12/01/03 -- Premier Wen Jiabao was shown on PRC television comforting AIDS patientsandpromising government support. This was the first AIDS related public appearance of a senior PRCleader and suggested that the government's near-total reluctance to acknowledge AIDS may beending. The Premier also promised that the government would provide AIDS drugs free of chargeto anyone who needed them. Experts estimate that 1 million people in the PRC are infected withAIDS. ( New York Times , p. 11) 12/23/03 -- While conducting drilling operations in the municipality of Chongqing insouthwestChina, employees of the China National Petroleum Corporation (CNPC) triggered a gas wellblowout, sending toxic vapors over a ten-square mile area and killing more than 230 people. Lessthan 2 weeks later, PRC investigators from the State Administration of Work Safety accused CNPCof safety violations and threatened to take legal action. 01/02/04 -- In a move "to promote transparency of police affairs," the PRC Ministry ofPublicSecurity announced that national, provincial, and local-level police departments must begin to holdregular news conferences and file "immediate media reports" on events of public interest. Accordingto the new policy, all police departments around the country must hold their first news conferenceprior to January 22, 2004, and regularly thereafter. 01/05/04 -- The PRC's foremost SARS expert, Director of the Guangzhou Institute ofRespiratoryDiseases Zhong Nanshan, confirmed that a Guangdong man suspected of having contracted SARSseveral weeks ago did have the disease. In response, Guangdong officials ordered the exterminationof the province's 10,000 captive civet cats, which some feel is the animal source of the disease. 01/07/04 -- According to the New York Times , police had detained and heldfor questioning theeditor and several employees of Southern Metropolis Daily , a PRC newspaper that first reported onthe new SARS cases. 01/12/04 -- The New York Times reported that PRC authorities wereinvestigating a new possiblecase of SARS in Guangdong. 01/19/04 -- The PRC government announced approval for doctors to begin human trials fora newSARS vaccine. The same day, the Communist Party announced an immediate initiative to improveworkplace safety throughout the PRC. 01/27/04 -- After months of official denials in the face of unsubstantiated reports that avianflu hadhit China, the PRC became the tenth Asian country to acknowledge presence of the virus. Officialsconfirmed 3 outbreaks: flocks of ducks in Guangxi province; ducks in Hunan Province; andchickens in Hubei Province. 01/29/04 -- Chinese Vice-Agricultural Minister Qi Jingfa said suspicions that China was theoriginof the avian flu outbreak were "a groundless guess." 01/30/04 -- China's official news agency reported avian flu outbreaks in 3 additionallocations: Anhui Province, the city of Shanghai, and Guangdong Province. To date, China has reported nohuman cases of avian flu. According to the Los Angeles Times, in addition to the PRC's Ministryof Health, which benefitted from the experience of dealing with SARS in 2002-2003, the PRC'sFarm Bureau, inexperienced in battling a health crisis, was also playing a role in dealing with avianflu. 02/04/04 -- A report in the Asian Wall St. Journal warned that the effects ofavian flu on China'sdomestic poultry business could result in substantial cuts in Chinese soy product imports. Accordingto the report, 40% of the PRC's soy imports come from the United States. 02/03/04 -- The United Nations Food and Agricultural Organization and the WorldOrganizationfor Animal Health held an emergency meeting in Rome to discuss the avian flu outbreak in Asia. 02/08/04 -- China announced newly confirmed cases of avian flu in poultry in six provinces:Hubei,Shaanxi, Gansu, Hunan, Guangdong, and Zhejiang. 02/09/04 -- China and other Asian countries banned poultry imports from the United Statesfollowing an avian flu outbreak in poultry in Delaware. U.S. officials said the Delaware flu strain(H7) is milder than the Asian strain.

Summary: In November 2002, SARS, a new and deadly human illness suspected of having an animal origin, made its first appearance in China. Chinese leaders at first minimized the effects of the newvirus and covered up the extent of its spread. But the disease moved rapidly to other countries,prompting the World Health Organization in 2003 to label the virus a "global health threat." Underintense public scrutiny, Chinese leaders in April 2003 eventually acknowledged that people weresickening and dying, apologized for their leadership failures in addressing the problem, and launcheda series of initiatives to try to contain the disease, limit its economic damage, and protect publichealth. By July 2003, the initial SARS outbreak had ended. But global disease specialists expressedconcern that the virus could recur, like influenza, or that other similarly mutating viruses could leapfrom the animal to the human world. On January 5, 2004, China confirmed the first new case ofSARS in Guangdong Province, where the 2003 outbreak had occurred. On January 27, 2004, PRCofficials acknowledged that several flocks of birds in China were infected with the same deadlystrain of avian flu that in recent weeks had ravaged bird populations and killed humans in otherAsian countries. The emergence of SARS and other new viruses has posed a steep learning curve for a new generation of Chinese officials who had assumed office in November 2002, only weeks before theoriginal SARS outbreak. In suppressing information early in the crisis, the government lostcredibility and public confidence. More reliable information was available from foreign mediasources, the Internet, and cell-phone text messages -- as many as 40 million a day during the 2003SARS crisis, according to one report. In the 2003 crisis, Chinese leaders were forced to adjust theirstrategy by publicly embracing two radical concepts: the public has a right to know aboutinformation directly concerning their daily lives, and government officials need to be accountableto the public for their performance. Officials began issuing regular briefings in 2003 about SARScases, and several top officials were fired for covering up the crisis. Since then, the government hasrevamped emergency procedures, issued rules requiring greater government transparency, andworked to reduce the deficiencies and prohibitive costs of public health care. Some observerssuggested that "lessons learned" from the 2003 SARS outbreak could permanently influence PRCgovernance. Some change can be seen in the more open and aggressive way officials have handled SARS cases in 2004. Officials have publicly announced both confirmed and suspected cases, ordered theextermination of many civet cats -- a culinary delicacy in China but a suspected source of animal-to-human transferof the disease -- and begun human trials of a new SARS vaccine developed inChina. Still, PRC officials in early January 2004 detained and questioned journalists from a Chinesenewspaper that first reported on the new SARS cases, suggesting that the government still seeks tocontrol information flow. And global health officials have criticized official secretiveness inaddressing the new avian flu outbreak.