Illness in China ails entire Asian economy. (Commentary).

TOKYO -- If you want to freak out people in subway cars around Asia, cough. Need to clear out an elevator? Sneeze. Care to have your own row in a movie theater? Start clearing your throat.

Such is life in a region that's becoming synonymous with the SARS epidemic. As severe acute respiratory syndrome spreads in Asia -- and many other parts of the globe -- it's increasingly weighing on the region's economies and markets.

Hong Kong is such a ghost town that Cathay Pacific Airways Ltd. is wondering when to ground all flights. Newspapers there print articles estimating how many times residents are washing their hands. Some taxi drivers avoid fares not wearing surgical masks. Restaurants and hotels are all but empty.

"Woody Allen would feel at home in Hong Kong," says Morgan Stanley Asia Ltd. Chief Economist Andy Xie.

Of course, Xie's crack about Hollywood's best-known director of neurotics and hypochondriacs contains an element of seriousness.

China fallout

That mainland China is beginning to experience a similar sense of neurosis and isolation is a far bigger concern to Xie and his peers. Asian nations have increasingly hitched their hopes to China. If SARS derails Asia's most vibrant economy at a time when large industrialized ones are coughing and wheezing, the region's export-dependent countries are in trouble.

With Japan walking in place' Asians have looked to China as both an economic anchor and locomotive. A year ago, the world's sixth-biggest economy was viewed as a threat. One heard much about the "hollowing out" of Asia as executives, frustrated by the cost of doing-business in places such as Hong Kong, Japan, Singapore and Taiwan, moved to mainland China, where labor and property costs are far lower.

The focus these days is on how to harness China's dynamism. China boasts what Japan, Asia's traditional locomotive, lacks: growing cities, a. rapidly expanding population and an emerging middle class hungry to display its new wealth. China's entry into the World Trade Organization added even more fuel to the economy, extending the nation's reach. Last year it attracted more foreign direct investment than even the United States.

Enter SARS, which has spread from its probable starting point in the southern Chinese province of Guangdong. to other parts of the most populous nation. China's government has been criticized for its slow response to SARS, as well as it efforts to hide the magnitude of its epidemic. It disclosed information only after an international outcry.

Beijing isn't doing its image any favors by encouraging millions of people to travel during the weeklong May Day holiday, even as Premier Wen Jiabao says the spread of atypical pneumonia "remains grave" in the nation worst-affected by the disease.

It's more proof that Beijing, worried about growth if people don't travel, is putting its economy ahead of its people. If SARS continues to spread apace in China, there may not be much of an economy before long. Everyone from Chinese officials to economists seems to be pooh-poohing how much damage SARS could do to China's 8 percent growth rate. International Monetary Fund Research Director Kenneth Rogoff, for example, thinks it may cut China's growth by 0.2 percent this year.

Here's where Woody Allen comes in again. Spooky for sure, television images of Chinese donning surgical masks exaggerate the seriousness of SARS. While it has infected more than 3,100 people worldwide, it's killed roughly 144. One could argue there's a Woody Allen-like quality to the hysteria over SARS.

Remember that far from being able to cure SARS, medical experts aren't sure how to stop its transmission. That makes economic forecasting, an inexact science in the best of times, pointless now. Remember, too, that the SARS effect may not show up soon in China's statistics given its vast population.

China has the world's most infections from the disease, about 40 percent of the total. "The impact of the crisis on China is escalating," says Morgan Stanley's Xie. "China is the only growing source of demand for many of the region's economies."

Even if SARS doesn't devastate China's economy, it's limiting Asia's access to it. The outbreak is keeping business people and investors from traveling there to buy things, sign contracts or inspect potential production sites.

The recent Guangzhou Trade Fair is a case in point. Last year's event attracted 1 million visitors. While the fair hasn't released attendance figures yet, an expected reduction in foreign buyers may mean fewer orders for manufacturers in an area often called the "world's workshop." Wal-Mart Stores Inc. and Carrefour SA were among those that didn't show up.

China's economy may indeed ride out the SARS crisis with minimal damage. If it doesn't, Asian economies and markets could be in for a tougher year than they had imagined.

William Pesek is a columnist with Bloomberg News.