What return of Chinese tourists means for global economy

CNN: In the years before Covid, China was the world’s most important source of international travellers. Its 155 million tourists spent more than a quarter of a trillion dollars beyond its borders in 2019.
That largesse fell precipitously over the past three years as the country essentially closed its borders. 
But, as China reopened on Sunday, millions of tourists are poised to return to the world stage, raising hopes of a rebound for the global hospitality industry.

Although international travel may not return immediately to pre-pandemic levels, companies, industries and countries that rely on Chinese tourists will get a boost in 2023, according to analysts.
China averaged about 12 million outbound air passengers per month in 2019 but those numbers fell 95 percent during the Covid years, according to Steve Saxon, a partner in McKinsey’s Shenzhen office. He predicts that figure will recover to about six million per month by the summer, driven by the pent-up wanderlust of young, wealthy Chinese like Emmy Lu, who works for an advertising company in Beijing.
“I’m so happy [about the reopening]!” Lu told CNN. “Because of the pandemic, I could only wander around the country for the past years. It was difficult.”

“It’s just that I’ve been stuck inside the country for a little too long. I’m really looking forward to the lifting of the restrictions, so that I can go somewhere for fun!” the 30-year-old said, adding that she wanted to visit Japan and Europe the most.  As China announced last month it would no longer subject inbound travellers to quarantine starting January 8, including residents returning from trips abroad, searches for international flights and accommodations immediately hit a three-year high on Trip.com (TCOM).

Bookings for overseas travel during the upcoming Lunar New Year holiday, which falls between January 21 and January 27 this year, have soared by 540 percent from a year ago, according to data from the Chinese travel site. Average spending per booking jumped 32 percent. 
The top destinations are in the Asia Pacific region, including Australia, Thailand, Japan and Hong Kong. The United States and the United Kingdom also ranked among the top 10. “The rapid buildup in … [bank] deposits over the past year suggests that households in China have accumulated significant cash holdings,” said Alex Loo, a macro strategist for TD Securities, adding that frequent lockdowns have likely led to restraints on household spending. There could be “revenge spending” by Chinese consumers, mirroring what happened in many developed markets when they reopened early last year, he said.

That’s good news for many economies battered by the pandemic. “We estimate that Hong Kong, Thailand, Vietnam and Singapore would benefit the most if China’s travel service imports were to return to 2019 levels,” said Goldman Sachs analysts. Hong Kong — the world’s most visited city with just under 56 million arrivals in 2019, most of them from mainland China — could see an estimated 7.6 percent boost to its GDP as exports and tourism income increase, they said. Thailand’s GDP may be boosted by 2.9 percent, while Singapore would get a lift of 1.2 percent. 

Elsewhere in the world, Cambodia, Mauritius, Malaysia, Taiwan, Myanmar, Sri Lanka, South Korea and the Philippines are also likely to benefit from the return of Chinese tourists, according to research by Capital Economics.

Hong Kong has suffered particularly acutely from the closure of its border with mainland China. The city’s pillar industries of tourism and real estate have been hit hard. The financial hub expects GDP to have contracted by 3.2 percent in 2022.
The city government announced Thursday that up to 60,000 people would be allowed to cross the border daily each way, starting Sunday.

Several other Southeast Asian countries reliant on tourism have kept entry rules relatively relaxed for Chinese tourists, despite the record Covid-19 outbreak that has swept through China in recent weeks. They include Thailand, Indonesia, Singapore and the Philippines.

“This is one of the opportunities that we can accelerate economic recovery,” Thailand’s health minister said this week. New Zealand has also waived testing requirements for Chinese visitors, who were the second largest source of tourist revenue for the country before the pandemic.

But other governments are more cautious. So far, nearly a dozen countries, including the United States, Germany, France, Canada, Japan, Australia and South Korea, have mandated testing.
The European Union on Wednesday “strongly encouraged” its members states to require a negative Covid test for visitors from China before arrival.