There have been many reasons to be concerned about the future of Chinese travel. After over a decade of explosive growth, for how much longer can this pace of expansion be sustained? Especially considering mounting issues both on the supply and demand sides of Chinese travel, concerns about the sustainability of growth have proven relevant for both key long-haul and short-haul destinations.

Among the issues likely dampening Chinese tourism growth are a weakening Chinese currency, rising fuel costs, and even rising consumer debt. Furthermore, the growth of tourism to some key destinations is likely depressed by ongoing issues, such as the travel ban in South Korea, the trade war with the United States, and tensions with tourism hotspot Taiwan.

But despite all of this, global Chinese travel had its best half-year ever in 2018. Unfortunately, for China, the same cannot be said about the country’s ability to attract foreign visitors.

International travel returns to double-digit growth

According to the latest report (link in Chinese) by the China Tourism Academy, the research arm of China’s Ministry of Culture and Tourism, Chinese international travel had superb performance in the first half of 2018. In the first six months of 2018, 71.3 million overseas trips were made by Chinese consumers, a staggering 15 percent increase compared to the same period last year.

Ctrip, China’s leading online travel agency (OTA), corroborated this staggering growth in the South China Morning Post, attributing a large part of the growth to improved visa policies for Chinese nationals in destinations around the world, as well as the growing number of international connections and visa application centers available in lower-tier cities in China.

“There has been a remarkable surge in international flights and visa service centers opening in China’s second- and third-tier cities. Residents are now finding it increasingly convenient to travel abroad,” Leon Peng, director of Ctrip’s vacation department, told the Alibaba-owned paper.

Domestic travel continues to dominate

The strength of China’s tourism market was also echoed in its domestic tourism industry, which enjoyed substantial growth in the first half of the year. Indeed, the Chinese domestic tourism industry has grown so large that it’s even making China’s (world-leading) outbound tourism market look tiny in comparison.

According to the China Tourism Academy, the first half of 2018 saw 2.8 billion domestic trips being made, an increase of 11.4 percent over the same period in 2017. In total, domestic tourism generated a staggering $356.6 billion (RMB 2.45 trillion) in revenue—representing a 12.5 percent increase on the same period a year prior.

Inbound tourism keeps disappointing

Unfortunately, the Chinese tourism success story ends with domestic tourism consumption. When it comes to tourism exports, i.e., its inbound tourism industry, China continues to struggle. The growth of China’s inbound tourism industry has been almost completely flat for the better part of a decade—and this despite the enormous capacity increases the country has seen both in terms of flights, hotels, and tourism infrastructure in general.

This trend continues to hold in 2018, with foreign visits to China down 0.4 percent year-over-year for a total of 69.23 million visits (including visits from the Special Administrative Regions of Hong Kong and Macau).

Of these visits, 76.7 percent were Asian visitors, with Europe and the Americas making up for the lion’s share of the remaining visitors at 12.1 and 8.0 percent respectively.

The news is particularly disappointing for tourism stakeholders in China as it’s clear that the so-called tourism free-trade zone in Hainan has had little to no positive effect on inbound tourism so far, and this despite the project being pushed at even the highest level of the government.

The positive take on all this is that tourism is leading China’s shift to a consumption-driven economy. Of course, that’s not great for its trade balance—but it has proven a great soft power tool.

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