China admits Sars may spread out of control

China is on the brink of a Sars epidemic and it might not be able to cope, health experts warned yesterday.

The World Health Organisation said that the illness was now reaching the Chinese countryside, where 70 per cent of the 1.3 billion population live.

The warning came as the illness spread to the Philippines. Economists said that the virus, which has killed 218 people and infected 3,900 worldwide, would cause more damage to the Asian economy than the war in Iraq.

In China, the WHO said, medical facilities in the provinces were poor and an epidemic would have disastrous consequences. Henk Bekedam, the WHO'S representative in Beijing, said: "I think we're going to have a very big outbreak in China. I think it will be quite a challenge to contain Sars within China, especially those provinces that have very limited resources."

The Chinese government, which last weekend sacked two senior officials and admitted having 10 times more Sars cases than originally thought, said that since Friday the virus had killed 13 people and infected a further 194, including 130 since Sunday.

The figures, contained in the first daily bulletin from the health ministry, brought the death toll in China to 92 and total cases to 2,001 – more than half the global total. Officials said the illness had spread to at least 10 of China's 31 provinces.

The WHO warnings were backed by Wen Jiabao, the Chinese premier, who said the health system in the countryside meant an epidemic would take hold "before we know it" and that the "consequences could be too dreadful to contemplate".

The Chinese government said it was setting aside £100m to deal with the outbreak.

The Philippines became the 26th country to fall victim to the virus; a spokesman said a Canadian nurse on holiday appeared to have been infected.

Health officials in Canada, which has suffered the largest outbreak outside Asia with a death toll of 14, said they were concerned that passengers on two trains in Toronto may have been exposed to the disease.

A nurse subsequently diagnosed with Sars had travelled at least twice on the city's metro system last week, Dr Barbara Yaffe, the city's medical officer, said.

In Britain, the Department of Health denied reports that it had earmarked an unnamed hospital to house all infected patients in the event of an epidemic. A spokeswoman said: "The NHS has contagious disease units across the country to deal with any such problem."

Officials in Hong Kong said a further six people had succumbed, bringing the number of fatalities to 94, the highest death toll in the world.

In Singapore, where there have been 190 cases and 14 deaths, food stalls ran out of supplies and the price of some vegetables doubled after the country's largest wholesale vegetable market was closed when three workers fell ill.

Financial analysts have downgraded growth forecasts across South-east Asia with the exception of Japan, saying that the drop in spending, tourism and business travel would depress growth more than the Iraq war.

The Association of British Travel Agents said last night that none of its members was currently offering holidays to Hong Kong, which was visited by 308,000 Britons last year. British Airways and Virgin Atlantic have both reduced their services to the destination.