In June, Panama officially recognized the People’s Republic of China as the official government of China, severing ties with the Republic of China (Taiwan). There is a wide range of economic and political benefits that could come from this diplomatic shift, but one that the Central American country is already preparing for is the potential for large numbers of Chinese tourists and tourist dollars.

Tourism was a key point of discussion during a visit to Panama by Chinese Foreign Minister, Wang Yi, this month. This prompted accusations “checkbook diplomacy” between Panama and the PRC.

The country has numerous high and mid-tier luxury resorts and hotels that cater mostly to Western tourists. Among its more popular destinations are the 365 islands of the San Blas Archipelago along the north coast of Panama.

No Latin American destination has broken into the list of top destinations for Chinese tourists but analysts and travel agents have been predicting for some time that the number of Chinese tourists traveling to Latin America will rise.

For Chinese outbound tourism to Latin America to grow, it will need to successfully compete with Southeast Asian nations for tourists interested tropical getaways. Thailand is the most popular foreign destination for Chinese tourists aside from Hong Kong and Macau. The beaches and resorts in Vietnam, Malaysia, and Indonesia also draw large numbers of Chinese tourists.

Moreover, given the relatively higher cost of traveling to Latin America as compared to Southeast Asian nations, it is unlikely that Latin America will be able to draw middle-income Chinese tourists. Latin America will need to need to tap into the outbound flow of high-income Chinese tourists in order to bring in more Chinese tourist revenue.

Travel times are also much longer to Latin America than any other region in the world, with travel times routinely surpassing 30 hours, which may deter many travelers.

However, many younger affluent Chinese travelers are increasingly interested in traveling to exotic, rarely visited destinations. For these younger, high-income travelers, Latin America might be the next big destination.

With increasingly close ties between China and Latin America, it is also a possibility that some of the countries in that region may reduce visa requirements and or establish visa exempt agreements like Ecuador has.

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