LONDON, Aug. 7 -- The deadly earthquake which struck in China's southwestern Yunnan Province is unlikely to have an effect on the wider Chinese economy, British experts said.

The earthquake hit Ludian County in Zhaotong City, a rural area with no great urban center and some distance from Yunnan's capital Kunming, which is unaffected.

It is a serious event for the area, however, as the area is not as densely populated as the areas in Sichuan Province and the power of the quake was less than that of the Sichuan earthquake in 2008, it is unlikely to have an effect on the wider Chinese economy, Guo Yu, Asia analyst at Maplecroft risk analytics, told Xinhua.

"Ludian County is a more localized incident. However, the Chinese have mobilized troops and the national government has very quickly initiated rescue efforts," Guo said.

He estimated the direct economic loss of Yunnan earthquake would be a small portion of the Yunnan Province's economic output.

The affected population is about one million, and in the context of China the effect of the quake was "relatively localized and limited," he said.

"One can assume that the cost will rise as the need for reconstruction grows. But generally speaking because of the enormous size of China, and more importantly the Chinese economy, the national economy can for sure absorb these costs very easily," he added.

Guo said it was now a major priority for the central government to carry out rescue, repair, and building operations.

"The central government will make it a key priority to make sure that the local economy does not suffer too much -- basically that Yunnan retains an upward trajectory in economic development," said Guo.

Chinese Premier Li Keqiang has visited immediately the affected villages to see the people. In addition the People's Liberation Army has been deployed to help with rescue and reconstruction.

"This is a national response to a localized problem and to make sure that people are looked after. The immediate response is relatively positive and pro-active," said Guo.

The focus will soon turn to long-term reconstruction, including compensation for small local businesses which may not have insurance policies.

The hydro power stations in the area could be affected by the quake, however, its major industry of mining was less likely to be affected.

At a provincial level, the main driver of the economy is tourism and its key tourist areas -- such as Lijiang and Xishuangbanna -- are some distance from the quake epicenter and unaffected by it.

AREA VULNERABLE TO EARTHQUAKES

Professor Bruce Malamud with the Department of Geography at King's College, London, told Xinhua how the earthquake happened in an area which is vulnerable to earthquakes.

Yunnan Province is close to the point where the Eurasian tectonic plate, on which China sits, meets the Indian plate, pushing up from the south.

The collision of the two has caused the emergence of Himalayas, and also caused earthquakes as the tension between the two plates resolves itself.

"The Yunnan Province is in an area that is very near to this. You have these faults which are coming away from the Himalayas. This makes for a very active earthquake region on the Earth," said Malamud.

He said a number of factors had caused the casualties. "This is a particularly forceful kind of earthquake where the waves radiate out horizontally, and it caused the buildings to shake back and forth, not just up and down. Now, this was compounded by the earthquake being very shallow. It was relatively shallow -- just 10 km in the earth and also very near to urban areas."

The other factors that contributed to the fatalities were the geology of the area, said Malamud, with steep slopes which had already had a lot of rain.

"So the ground tended to tremble a bit more; there were a lot of landslides," he said.

There are more earthquakes recorded than there were 20 years ago, he said, but the perception that there are more earthquakes now is a false one.

Malamud said, "When one looks at the actual records of earthquakes over the last 100 years, one sees that it has not changed. On average we have 15-17 magnitude 7 earthquakes or greater a year, and on average worldwide we have about 150 magnitude 6 earthquakes every year."

He added: "So, the statistics themselves are not changing that much, and humans are not necessarily causing more earthquakes."