China’s economy has faced significant headwinds, but domestic tourism has emerged as a rare bright spot, offering a potential buffer against broader economic challenges. During a recent five-day holiday marking Labour Day, 295 million trips were made within China, a 28% increase compared to 2019, according to the Ministry of Culture and Tourism. The numbers from the Transport Ministry were similarly impressive, with 92 million rail trips, nearly 10 million air trips, and 1.25 billion highway journeys.
However, international arrivals into China remain significantly lower than pre-pandemic levels, with current foreign visitor numbers at about 30% of 2019 levels. This stark disparity raises questions about why domestic tourism is thriving while international tourism lags. One possible reason is the domestic demand for travel after years of pandemic restrictions. A visit to Wuzhen, a picturesque town near Shanghai, highlights the surge in domestic tourism, with tourists filling the narrow pathways and traditional bridges, some even dressing in traditional hanfu clothing for photos.
Despite the revival of domestic tourism, the Chinese economy still faces considerable challenges. The property sector is struggling, local government debt is mounting, and youth unemployment remains high, leading to uncertainty among university graduates. Against this backdrop, the Communist Party has set a GDP growth target of “around 5%” for this year, though some analysts question the accuracy of China’s official growth figures and whether the target can be met without significant stimulus.
One potential avenue for economic growth could be a stronger domestic travel sector, which might offer broader business opportunities and create jobs in the service industry. Schubert Lou, chief operating officer at travel agency Trip.com, noted a strong demand for domestic travel, with hotel search volumes up 67% and flight volumes up 80% compared to the previous year. Similarly, Peng Han, a consultant with Travel Daily, observed growth among major international hotel brands like Intercontinental, Marriott, and Hilton, suggesting these companies are optimistic about China’s domestic tourism market.
However, Peng Han pointed out that while domestic travel volumes have increased, per capita consumption remains low due to economic uncertainty. People are traveling more frugally, seeking value options rather than luxury experiences. Meanwhile, the lack of international travelers, a group known for higher spending, continues to impact the tourism industry.
Several factors are contributing to the decline in international visitors. The COVID-19 pandemic and China’s strict prevention measures deterred travel, but other factors also play a role. The changing geopolitical landscape and increased societal regulations in China have made some foreign visitors hesitant to travel to the country. Western governments have issued cautionary travel advice due to perceived risks of arbitrary enforcement of local laws and possible detention. Additionally, reduced flight availability and high ticket prices make travel to and from China more challenging, particularly for North American connections.
President Xi Jinping recently addressed this issue during the Asia-Pacific Economic Cooperation conference, emphasizing the need for more direct flights and streamlined visa procedures to boost people-to-people exchanges. However, the Biden administration has increased Chinese airline flights only from 35 per week to 50, far below the 150 weekly trips seen before the pandemic. Moreover, US aviation workers and airlines are pushing against further expansion, citing unfair advantages for Chinese airlines due to state support and access to Russian airspace.
Technical challenges also contribute to the decline in international tourism. China’s advanced phone payment and booking systems, while convenient for residents, can be a significant hurdle for foreign visitors, as these systems often require a Chinese phone number or specific apps that are not readily accessible to non-Chinese speakers. This complexity can be off-putting to international tourists who are used to more universal systems.
Professor Chen Yong from Switzerland’s EHL Hospitality Business School suggests that bridging this technological divide is crucial for reviving inbound tourism. He argues that service providers should consider the perspective of foreign tourists who may not understand the language or have access to Chinese payment methods. Establishing a culture that accommodates foreign tourists’ needs is key to fostering long-term growth in China’s tourism sector.
Despite these challenges, some efforts are being made to attract more international visitors. China has increased the number of countries whose citizens don’t require visas to enter, leading to a surge in arrivals from Southeast Asia. In certain Chinese cities, transit passengers from over 50 countries can stay for a few days without a visa if they have an onward ticket. Additionally, Shanghai hotels above a three-star level have been told to prepare for international credit cards, and some taxis have started accepting them.
However, the revival of inbound tourism may take time, and it remains to be seen if China’s efforts will be enough to reverse the current trend. While places like Wuzhen are seeing a resurgence in domestic tourism, international visitor numbers remain a fraction of what they once were. Nonetheless, the hope is that China’s unique sites and cultural experiences will eventually draw foreign visitors back, despite the current challenges.
