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ANALYSIS | What does the return of Chinese tourists mean for the world economy?


As China prepares to reopen its doors this Sunday, millions of tourists are poised to return to the world stage.

The covid-19 outbreak in China worries markets 8:58

(CNN) --

In the years before Covid-19, China was the world's largest source of international travelers.

Its 155 million tourists spent more than a quarter of a billion dollars beyond its borders in 2019.

That abundance has fallen precipitously in the last three years, as the country has virtually closed its borders.

But as China reopens its doors from Sunday, millions of tourists are poised to return to the world stage, raising hopes of a rebound for the international hotel industry.

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

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China averaged about 12 million outbound air passengers per month in 2019, but those numbers dropped 95% during the covid years, according to Steve Saxon, a partner in McKinsey's Shenzhen office.

He predicts that figure will rebound to around 6 million a month by the summer, fueled by the pent-up thirst for travel by wealthy young Chinese like Emmy Lu, who works for an advertising company in Beijing.

"I am very happy (about the reopening)," Lu told CNN.

"Because of the pandemic, I was only able to roam the country for the past few years. It was difficult."


"It's just that I've been cooped up in the country for too long. I can't wait for the restrictions to be lifted, so I can go somewhere and have fun!" said the 30-year-old, adding that what she wanted most was to visit Japan and Europe.

A traveler at the Beijing Capital International Airport on Friday, December 30, 2022. (Credit: Stringer/Bloomberg/Getty Images)

When China announced last month that it would stop quarantining incoming travelers starting Jan. 8, including residents returning from trips abroad, searches for international flights and accommodation immediately hit their highest level in three years in

Bookings to travel abroad for the upcoming Lunar New Year holiday, which falls between January 21 and 27 this year, jumped 540% from a year ago, according to data from the Chinese travel site.

Average spend per booking increased 32%.

The main destinations are in the Asia-Pacific region, such as Australia, Thailand, Japan and Hong Kong.

The United States and the United Kingdom are also in the top 10.

"The rapid increase in (bank) deposits over the past year suggests that Chinese households amassed significant cash reserves," said Alex Loo, macroeconomic strategist at TD Securities, adding that frequent account closures have likely restrained bank spending. the homes.

Chinese consumers could "get even" as many developed markets did when they reopened early last year.

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Who benefits?

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

"We estimate that Hong Kong, Thailand, Vietnam and Singapore would benefit the most if China's imports of travel services returned to 2019 levels," Goldman Sachs analysts said.

Hong Kong - the world's most-visited city with just under 56 million arrivals in 2019, the majority coming from mainland China - could see an estimated 7.6% boost in its GDP as exports and revenues rise. tourism, they said.

Thailand's GDP could increase by 2.9%, while Singapore's would be 1.2%.

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

Hong Kong suffered especially from the closure of its border with mainland China.

The tourism and real estate sectors, pillars of the city, have been greatly affected.

The financial center forecasts a GDP contraction of 3.2% in 2022.

The city government announced Thursday that, starting this Sunday, up to 60,000 people will be able to cross the border daily in both directions.

Several other tourism-dependent Southeast Asian countries kept entry rules for Chinese tourists relatively relaxed, despite the record Covid-19 outbreak that has hit China in recent weeks.

Among them are Thailand, Indonesia, Singapore and the Philippines.

"This is one of the opportunities to speed up the economic recovery," Thailand's Health Minister said this week.

New Zealand also waived the obligation to undergo covid tests for Chinese visitors, who were the country's second largest source of tourism revenue before the pandemic.

Who wants the tests?

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 required testing.

On Wednesday, the European Union "strongly encouraged" its member states to require a negative covid test for visitors from China before their arrival.

There is a clear "conflict" between tourism authorities and policy and health officials in some countries, said Saxon, who heads McKinsey's travel practice in Asia.

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

The International Air Transport Association (IATA), the global influence group for the airline industry, along with airports represented by ACI Europe and Airlines for Europe, issued a joint statement on Thursday calling the EU move "regrettable " and "hasty reaction".

However, they welcomed the additional recommendation to test wastewater as a way to identify new variants of the disease, stating that it should be an alternative to testing passengers.

Full recovery?

In addition to the restrictions, international travel will take time to fully recover as many Chinese must renew their passports and reapply for visas, analysts say.

Lu, from Beijing, said he was still considering his travel plans, taking into account the various test requirements and the high price of flights.

"Restrictions are normal, because everyone wants to protect people in their own country," he said.

"I'll wait and see if some policies are softened."

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Liu Chaonan, a 24-year-old from Shenzhen, said she initially wanted to go to the Philippines to celebrate the Chinese New Year, but did not have time to apply for a visa.

So she opted for Thailand, which offers quick and easy electronic permits.

"I have little time and I need to leave in about 10 days. People can choose some places and countries with a visa to travel," he said, adding that he plans to learn diving and wants to buy cosmetics.

His total budget for the trip could exceed 10,000 yuan (US$1,460).

Saxon said he expected China's international travel to fully recover by the end of the year.

"Usually people are pragmatic and countries will welcome Chinese tourists because of their purchasing power," he said, adding that countries could remove restrictions quickly when the COVID situation improves in China.

"International tourism will take time to get going, but it will come running back, when it happens."


Source: cnnespanol

All news articles on 2023-01-09

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