The arrest of Huawei CFO Meng Wanzhou in Vancouver — and China’s ensuing arrest of former Canadian diplomat Michael Kovrig — is the latest, and most dramatic, development in the escalating trade war between Beijing and Washington.
Implications for the global economic system after these arrests now go beyond the accusations of bypassing sanctions against Iran that the U.S. had originally levied against Meng. The original arrest was made by Canadian authorities at the request of U.S. law enforcement, and now China has arrested two Canadian citizens. For Canada’s tourism industry, these developments are unfortunate and could cause Chinese consumers to view Canada as an unsafe destination for travel.
China’s tourists are heavily influenced by nationalism, and the state media the Global Times is already contending that Chinese netizens are calling for a boycott of travel to Canada. It’s become somewhat of a boilerplate response by Chinese authorities and nationalists that recognize how desperate global destinations have become for Chinese tourism. After the Phoenix boat accident in Thailand and the Thai prime minister’s disparaging comments towards the company’s Chinese operators, Chinese netizens called for a boycott of Thailand.
A boycott directed at Canada would be far less damaging than one aimed at China’s neighbor Thailand which had expected nearly $9 billion in tourism revenue from Chinese arrivals prior to the boat accident. A tourism boycott, however, could stall the momentum Canada has experienced over the past few years with China’s outbound tourists. Canada and China just wrapped up their Canada-China Year of Tourism, which helped bring over 680,000 Chinese tourists to the country in 2017. This year has already seen some impressive growth, as well, with September arrivals up 9.5 percent from the previous year. But there will undoubtedly be a drop in Chinese tourism as a result of this incident, regardless of how the Meng case plays out.
Yet Canada attracted over 20 million visits in all last year, and China — despite holding enormous future potential as an outbound market for Canada — is far from the country’s most important source market.
Unfortunately, these recent disputes are creating a new level of fear that Chinese citizens could be unilaterally detained by U.S. or Canadian authorities because of trade or security disputes. While this is a possibility, it seems unlikely that either Canada or the United States will pursue that avenue of response. Regardless, this fear will understandably lead to a downturn — a temporary one, hopefully — in business tourism to both Canada and the United States.