China's gross domestic product grew by 9.9 per cent year-on-year in the first quarter of the 2003, the fastest quarterly growth rate for six years. While some independent analysts questioned the accuracy of the data, Huang Yiping, the China economist at Salomon Smith Barney, believed that the economy had been growing dramatically. However, he cited as factors rising imports ahead of the US-Iraq war and evidence that manufacturers were working hard to deliver on orders before the war began.
This indicates that there could be a fall-off in the second quarter as a result of the war and the impact of the Sars virus. Huang said that the services sector, which accounts for about a third of China's economy, could be hit particularly hard in the major cities.
Another US finance house Morgan Stanley Dean Witter predicted that capital expenditure and foreign direct investment projects were likely to be delayed because equipment suppliers or investors were unable to travel to China.