Post-zero-Covid: What does the return of Chinese tourists mean for the global economy

Hong Kong
CNN
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In the years before Covid, China was the world’s most important source of international travelers. Its 155 million tourists spent more than a quarter of a trillion dollars outside its borders in 2019.

This largesse has decreased dramatically over the past three years as the country has essentially closed its borders. But, like China Preparing to reopen On Sunday, millions of tourists are preparing to return to the world stage, reviving hopes for a recovery in the global hospitality industry.

Although international travel may not immediately return to pre-pandemic levels, businesses, industries and countries that depend on Chinese tourists will get a boost in 2023, according to analysts.

China averaged about 12 million air travelers per month in 2019, but those numbers fell 95% during the Covid years, according to Steve Saxon, a partner in McKinsey’s Shenzhen office. He expects that number to recover to about 6 million a month by the summer, spurred by the pent-up touring of young and wealthy Chinese like Amy Lu, who works for an advertising firm in Beijing.

“IM so happy [about the reopening]! Lu told CNN. “Because of the pandemic, I could only go around the country for the past years. It was hard.”

“It’s just that I’ve been stuck inside the country for a very long time. I’m really looking forward to the restrictions being lifted, so I can go somewhere for fun!” said the 30-year-old, adding that she’d like to visit Japan and Europe the most.

China also announced last month that it would no longer quarantine inbound travelers from January 8, including residents returning from overseas trips, Searches for international flights and accommodations immediately reached a three-year high on Trip.com

(crumpled).

Overseas travel bookings during the upcoming Lunar New Year holiday, which falls between January 21 and January 27 this year, rose 540% over last year, according to data from Chinese travel site. Average spend per booking jumped 32%.

The top destinations are located in the Asia Pacific region, including Australia, Thailand, Japan and Hong Kong. The United States and the United Kingdom also ranked among the top ten.

The rapid accumulation in… [bank] Deposits over the past year indicate that households in China have accumulated significant cash holdings, said Alex Lu, a macro analyst at TD Securities, adding that frequent lockdowns have likely led to household spending restrictions.

There could be “revenge spending” by Chinese consumers, he said, mirroring what happened in many developed markets when they reopened early last year.

This is good news for many economies hit by the pandemic.

“We estimate that Hong Kong, Thailand, Vietnam and Singapore will benefit most if Chinese travel services imports return to 2019 levels,” Goldman Sachs analysts said.

Hong Kong – the most visited city in the world with just under 56 million expatriates They said 2019, mostly from mainland China – could see an estimated 7.6% increase in gross domestic product as exports and tourism income increase. Thailand’s GDP may be boosted by 2.9%, while Singapore will get a 1.2% hike.

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

Hong Kong has particularly suffered from the closure of its border with mainland China. The city’s core industries such as tourism and real estate have been hit hard. The fiscal position expects GDP to contract by 3.2% in 2022.

The city government announced Thursday that up to 60,000 people will be allowed to cross the border each day Each way, starting on Sunday.

several more Southeast Asian countries that depend on tourism have maintained relatively comfortable entry rules for Chinese tourists, despite a record Covid-19 outbreak that has gripped China in recent weeks. They include Thailand, Indonesia, Singapore and the Philippines.

“This is one of the opportunities where we can accelerate the economic recovery,” Thailand’s health minister said this week.

New Zealand has also waived testing requirements for Chinese visitors, who were the country’s second-largest source of tourism revenue 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 member states to require a negative Covid test for visitors from China prior to arrival.

There is clearly “clash” between tourism authorities and political and health officials in some countries, says Saxon, who leads McKinsey’s travel practice in Asia.

Airlines and airports have already criticized EU recommendations on testing requirements.

The International Air Transport Association, the aviation industry’s global lobby group, together with Airports represented by ACI Europe as well as Airlines for Europe, issued a Joint statement on Thursday, describing the EU’s move as “unfortunate” and an “extraordinary reaction”.

However, they welcomed the additional recommendation to Wastewater testing As a way to identify new variants of the disease, saying it should be an alternative to passenger testing.

Besides the restrictions, international travel will take time to fully recover because many Chinese must renew their passports and apply for visas again, according to analysts.

Lu said from Beijing that she is still considering her travel plans, considering the various testing requirements and the high price of flying.

“The restrictions are normal, because everyone wants to protect people in their country,” she said. “I will wait and see if some of the policies are eased.”

Liu Chunan, a 24-year-old in Shenzhen, said that she initially wanted to go to the Philippines to celebrate the Chinese New Year, but did not have time to apply for the visa. So I moved to Thailand which offers easy and fast e-passes.

“The time is short and I need to leave in about 10 days. People may choose some places and countries that allow visas to travel to,” she said, adding that she plans to learn diving and would like to buy cosmetics. Their total trip budget can exceed 10,000 yuan ($1,460).

Saxon said he expects international outbound travel to China to fully recover by the end of the year.

“In general, people are pragmatic and countries will welcome Chinese tourists because of their purchasing power,” he said, adding that countries may quickly remove restrictions when the COVID situation in China improves.

“It will take some time for international tourism to take off, but it will pick up quickly when it does.”