How China’s Economy is Affected through Tourism

Tourism has become as integral growth in any nation’s economy. Not only does it enhances one’s image in a global scale, but also increases one’s sources of revenue. This has been vital to China’s growth in the past years. It ranks as the third most visited country in the world, next to France and the United States.

According to Voa News, “Chinese spent $291.2 billion on business travel in 2015, which was slightly higher than U.S. spending of $290.2 billion.” Given that figure, this is still considered as a new occurrence in China’s history. It’s also something that needs to be focused on as this could be one of the primary growing economic sectors in the country if managed correctly.

There are three types of tourism: inbound, outbound and domestic. For China, the domestic and outbound sectors have been appreciating through the years. However, this does not apply well with the inbound tourism. The country has been having struggles in maintaining consistency in this area. For 2013, the estimated revenue for inbound tourism is approximate $475.41 billion. But from 2012 to 2014, this has been declining by approximately 2.5 percent.

There were a lot of factors considered as to what has affected such. One of which is the fluctuating exchange rates and the appreciating value of RMB currency. This then led tourists to choose other destinations with cheaper rates. Another factor is the recession that happened in the United States and European countries. This caused people in these countries to spend less.

Since these two contribute to a large portion of China’s inbound tourists, revenues were also affected. Political issues could also be correlated to the changes experienced. According to CSIS, “For the past decade, Sino-Japanese relations have been periodically tense, and the number of tourists visiting China from Japan decreased annually by almost 19 percent between 2004 and 2014.” This political rivalry may have started even way back in the Rape of Nanking incident which may somehow still have an effect on their current relationship. This goes the same for the Philippines as they still have ongoing territorial disputes. However, despite that controversy, Filipino tourists have risen by 33 percent in the span of 2009 to 2013.

When it comes to outbound tourism; the top countries in Asia, that Chinese locals travel to Korea, Thailand, and the Philippines. With the one year span from 2012 to 2013, the tourism rate has increased by more than 50 percent. As for the Western countries, the United States, France, and Italy are the top travel destinations. The average spending of Chinese tourists in the United States are $6,000 compared to the average spending of $4,000 for other international tourists.

A bulk of such spending by Chinese tourists contributes to luxury-brand items from Louis Vuitton and Chanel. In one of the recent studies, this has paved the way for some brands in the United States to hire more Mandarin-speaking staff. All these spending account to the improved living standards in China which allow them to spend more. Millennials are also a significant factor to be considered as they tend to spend more and travel by themselves as compared to the traditional practice of joining groups. Governments around the globe are slowly adapting to the rise of Chinese tourists by offering longer durations for visas and adjusting specific rules and regulations.

Domestic tourism is as important as the two preceding sectors. As the increase in the number for this sector could help enhance the country’s image, not only for more locals but also international tourists. The domestic market benefits could continue to rise. Some of the most popular destinations for domestic travelers are Hong Kong, Beijing, Shanghai and Guang Zhou. Most of the locals travel during their two golden week’s holiday. However, intense traffic and mediocre service should be expected.

It is evident how the Chinese government has exerted their efforts in promoting both foreigners and locals to travel around China. They’ve hosted the 2008 Olympics in Beijing, Shanghai Expo in 2010 and the upcoming 2022 Winter Olympics. With this being said, we’ll see more on how the tourism sector in China will rapidly increase in the years to come.