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Chinese are going places

By Hu Angang | China Daily Global | Updated: 2019-08-12 08:29

Decline in number of Chinese travelers to the US as a result of the trade war will translate into surging number of visitors to other countries

If the dictum "the customer is always right" were true, justice would eternally side with China, the most populous country and, by extension, the biggest customer in the world. And the rising income of 1.4 billion Chinese people has made this gigantic "customer" the biggest source of direct increase in international tourism income for over 200 countries and regions across the world.

Entering the international tourism market at the turn of the 21st century, China has risen to become the world's biggest customer of the tourism industry.

According to the World Tourism Organization, in 2012 China overtook Japan as Asia's biggest spender in international tourism, also outperforming the United Kingdom and Germany to rank second in the world. By 2014, China had outspent the United States to become the world's most generous source of international tourism revenue.

In 2017, Chinese tourists spent $257.7 billion on international travel, 18.15 times the $14.2 billion spent in 2000. The average annual increase over that period was 18.6 percent, considerably higher than the nominal GDP growth of 13.2 percent, showing a growth elasticity of 1.409, where every increase of 1 percentage point in nominal GDP translated into an increase of 1.4 percentage points in international tourism.

A global comparison shows that the increase in China's international tourism far exceeds the world's average of 6 percent, not to mention the 3.8 percent of the US.

China's share of global tourism spending grew from 2.6 percent in 2000 to 17.8 percent in 2017, an increase of 15.2 percentage points, while over the same period the proportion of the US shrank from 17 percent to 12 percent.

Clearly, China's thriving economy is not only a powerhouse of world economic growth, but also a driving force of global tourism spending. It is estimated that China contributed 26.7 percent to the growth in tourism spending worldwide from 2000 to 2017, and 45.7 percent from 2010 to 2017 in the aftermath of the international financial crisis.

Why has China become the world's biggest source of outbound tourists? What has led to this growth? As China is the world's most populous country, outbound tourists accounting for a mere 10 percent of the Chinese population would be equivalent to the entire population of Russia - 142 million, which ranks ninth in the world - traveling abroad. China's opening-up has also facilitated entry and exit for its citizens.

According to the department of consular affairs of the Chinese Ministry of Foreign Affairs, by May this year, Chinese ordinary passport holders had been granted rights of entry by 71 countries and regions: of these, 14 countries have agreed mutual exemption of visas with China; 15 countries have unilaterally allowed Chinese citizens to enter without a visa, and 43 countries implement a visa-on-arrival policy for Chinese citizens.

Over the past five years, the number of international routes connecting China with other countries has increased from 381 to 784, the number of countries accessible by regular international flights has increased from 52 to 61, the number of cities connected by these flights from 121 to 167, and the number of international air passengers has seen annual growth of 18.8 percent. There has been sustained growth in spending per capita on international tourism.

Such Chinese outbound tourism has vast potential for growth. In 2017, the total number of Chinese outbound tourists was 143.04 million, 1.63 times that of the US, whose outbound tourists numbered 87.7 million, and 9.1 percent of the world's total of 1.567 billion. In 2018, the number of Chinese outbound tourists surged to 149.72 million, a year-on-year increase of 14.7 percent, yet this represents just 10.7 percent of the total population. For the majority of Chinese citizens outbound tourism still remains a luxury.

Chinese are going places

In order to reach the benchmark of popularization this proportion must exceed 15 percent, 210 million outbound tourists. Even with a proportion exceeding 30 percent, more than 400 million outbound tourists, the figure would still remain behind that of the European Union, which had 466.93 million outbound tourists in 2017, indicating that there is ample space for growth before China enters the era of universalization of outbound tourism - over 50 percent.

China has always been in the red in terms of international tourism; that is, spending has far exceeded the income generated. Revenue from international tourism has reached $32.6 billion, far less than the $257.7 billion spent by Chinese tourists overseas. This situation is expected to continue.

The first decade of the 21st century saw strong momentum in tourism from China to the US, with the number of Chinese visitors tripling from 249,000 in 2000 to 802,000 in 2010. In 2017, 3.17 million Chinese tourists visited the US, 12.73 times the number in 2000. According to statistics published by the US National Travel and Tourism Office, arrivals from China amounted to 2.9 million in 2018, a decrease of 5.7 percent compared to the previous year, the first decline since 2003. The main reason for this decline has been the trade war between China and the US.

But then, he who gives the cold shoulder to customers loses the game.

In the arena of economic globalization buyers are winners - big buyers are big winners while super buyers are super winners. China is a leading member of the super buyer club, and set to overtake the US as the world's biggest buyer.

The decline in Chinese tourism to the US will surely translate into surging numbers of travelers to other countries. As the saying goes, "when one door shuts, another will open", and US tourism and related industries will suffer the consequences.

Chinese visitors remain super buyers, and in 2019 the number of outbound travelers from China will exceed 160 million, equivalent to half the US population.

The author is dean of the Institute for Contemporary China Studies and professor of the School of Public Policy and Management at Tsinghua University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Chinese are going places

(China Daily Global 08/12/2019 page13)

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