Officials and experts are confident that severe acute respiratory syndrome (SARS) will not cause severe damage to the economy of Beijing - even though the epidemic is set to continue for several months.

All economic data for the past four months suggest SARS will not have a great impact on the development of Beijing's economy, said Yu Xiuqin, spokeswoman of the Beijing Municipal Statistics Bureau.

She said the capital's economy has been following a five-to six-year cycle and the latest one began last February.

This cycle is different from traditional ones that are marked by prosperity and recession. Instead it suggests continuous economic growth.

Chinese economist Hu Angang supported the idea that Beijing had a special economic development mode.

He said the annual economic growth rate of Beijing was more than 10 per cent for the past five years. This year the rate would be between 12 and 13 per cent if there are no negative impacts from SARS.

Although the booming Beijing economy lost growth of half a per cent at the end of April, Hu said the impact will become more serious as time passes. It might restrict this year's economic growth rate to around 10 per cent.

"Exactly how much the local economy will be affected by SARS depends on how long it takes the government to bring the epidemic under control,'' Hu said.

The economic history of many countries suggests an economy is at its most vigorous stage when its per capita gross domestic product (GDP) passes US$3,000, which is exactly where Beijing is right now.

Statistics from the bureau reveal the city saw a 22.9 per cent increase in retail turnover during the first four months of this year - by far the highest in the country.

"Purchasing power is real, even though it might be withheld for the time being because of SARS.,'' said Hu.

As for the badly hit tertiary industry, which contributes more than 60 per cent to the city's total economy, Yu said other new growth areas will offset negative impacts.

Car sellers and telecommunication operators have seen two-digit increases in business as many people avoid public transport and stay home longer.

Editor: Liao Ming