The war in Afghanistan has shut down many of China's construction projects in central Asia, driven diplomats and workers out of Pakistan and made the country fear for the future of its oil imports. However, most companies believe that as long as the war is short it will not have a major impact on China's economy or on its exports to the United States, which account for 21 per cent of its exports. Yesterday was the first day Chinese newspapers could give full coverage to the air attacks by the US and Britain against Afghanistan, which they illustrated with photographs of black Stealth bombers and US planes on ships being loaded with missiles. In line with orders from the Communist Party's propaganda department, these images had to take second place to reports of a telephone call between President Jiang Zemin and President George W. Bush and of Japanese Prime Minister Junichiro Koizumi apologising for war crimes. The war has already hit China's economic interests. The majority of Chinese working in companies in the Pakistani cities of Quetta and Peshawar have left, as have 160 staff of Chinese firms in Karachi, along with some of the staff of the city's Chinese consulate, Beijing Youth Daily reported yesterday. Yang Jijian, head of the North America division at the research institute of the Ministry of Foreign Trade and Economic Co-operation (Moftec), said that many Chinese construction projects close to the war zone had stopped. These are an important foreign-exchange earner for China, bringing in US$14.94 billion last year, with two-thirds of the projects in North Africa, central Asia and Southeast Asia. The big fear for China is oil, of which it has almost no strategic reserve. Last year it imported 70 million tonnes, accounting for one-third of its consumption, of which nearly two-thirds come from the Middle East. The worst-case scenario for Beijing is a long war leading to anti-government demonstrations in Middle East oil-producing countries, a change of government and a sharp increase in oil prices. 'If the war goes on for a long time, it could change China's long-term oil strategy,' Mr Yang said. 'Sixty per cent of our oil imports come from the Middle East. If the US uses the war to establish a military presence in the region, it has to affect China's energy strategy. 'Afghanistan is a neighbour of China and Kazakhstan and an important energy partner. The west-east pipeline and the shipment of oil from Kazakhstan will become even more important,' he said. China is building an oil and gas pipeline from oil fields in the western region of Xinjiang to Shanghai, a project driven more by politics than economics and a desire to be as self-sufficient as possible in energy. The mainland has discussed with the Kazakh government a plan to build a pipeline from oil fields on the Caspian Sea to Xinjiang but building has not started because, with oil prices at their present level, it is not economically feasible. A prolonged war would strengthen the case for both of these pipeline projects, reducing China's dependence on the Middle East and the US, whose military controls the sea lanes. Senior oil officials last week said the terrorist attacks in the US on September 11 had accelerated plans for a strategic reserve to be used in the event of war or sanctions. They said an initial plan to have reserves of six million tonnes by 2005 had been revised up to 18 million. Since 1996, domestic output has stagnated at about 160 million tonnes a year. Official estimates put domestic demand in 2010 at between 294 million and 319 million tonnes, with imports of about 100 million. The other major worry for China is the impact of the war on the US economy, on demand in the US for Chinese products and, in the longer term, the effect on global demand if the US economy goes into recession. In a survey published yesterday by the Financial Daily of 20 listed companies and 11 financial institutions, 48 per cent said the impact of the war would be small, 42 per cent said there would be no impact and 10 per cent said the impact would be good. The companies said they were mainly dependent on domestic demand. 'If the war can be finished quickly and wipe out the terrorists, it would be a great stimulus to the world economy,' the survey's summary said. 'But if it becomes a war like that in Vietnam, it will deal a serious blow to the US economy. A recession in the US will bring the world into recession.' Of the firms surveyed, 65 per cent said the war would have a negative impact on the world economy, with the worst hit sectors being energy, aviation and finance. Mr Yang said the short-term impact of the terrorist attacks on trade with the US would be limited, with exports being normal over the next three to four months because they were orders that had already placed. 'If orders fall, we will not see the impact until the start of [next year].' He forecast growth in this year's exports to the US at about 4 per cent. In the first eight months, according to China's figures, exports were US$35.6 billion, an increase of 4.9 per cent over a year earlier. 'Over the past 20 years, exports to the US have risen by an average of about 19 per cent a year,' he said. 'An increase is normal. Our figures show that for each one percentage point fall in US growth domestic product, overall imports fall 2-3 per cent and those from China fall 5-10 per cent.' What comforts China is that it exports necessities upon which Americans have come to rely and which no other developing country can produce as cheaply. They are cheap and not as vulnerable to fluctuations in demand. According to Moftec figures, export items to the US with a value exceeding US$1 billion last year were electrical, leather, metallic and plastic goods, shoes, toys, garments, leather goods and furniture. Other links between China and the US will be hurt by the terrorist attacks and the war. The Global Times , one of the most popular newspapers in China, yesterday ran a story on how the US has been tightening the issue of student visas to foreigners, with one state Congressman in California proposing a six-month freeze on all such visas to allow a thorough investigation of the students already there. China has a vast 'foreign study' industry of companies and agents which monitor the visa and entry regulations, as well as the fees and courses offered in the countries where Chinese want to study, directing people to where entry is easiest and the costs most reasonable. The combination of tighter visa restrictions and fear of revenge attacks in the US is likely to deter many Chinese from studying and travelling there. However, the war is not bad news for everyone. China's sizeable armaments industry should benefit from higher sales to customers in central and Southeast Asia and the Middle East.