Progress Assessment and Policy Outlook of China’s Inbound and Outbound Tourism Recovery

 

Guilin &Macao, September 2022

Dai Bin, President of China Tourism Academy

 

In the past three years, during my academic exchanges with colleagues from around the world, Hong Kong and Macau included, the question I got asked most is “when will China or, to be more specific, China’s mainland, reopen its outbound tourism market”. Several ambassadors or tourism officials had told me that they were willing to pay me one million yuan if I could give them a specific date. Joke aside, it does reflect the importance that countries and regions around the world attach to the Chinese market and their expectations for the recovery, revitalization and sustainable development of world tourism.

 

I. Embracing a more open form of regionalism and promoting the resilient recovery of international tourism by stimulating business travels

 

In his keynote speech at the Special Summit to Commemorate the 30th Anniversary of China-ASEAN Dialogue Relations, President Xi Jinping noted that one of the most important experience China and ASEAN countries gained in the development of bilateral relations is the “principles of inclusiveness and mutual learning and the shared commitment to open regionalism”. The Regional Comprehensive Economic Partnership (RCEP), initiated by ASEAN, was formally signed and entered the construction phase in November 2020. It is to date the most promising FTA in the world, covering the largest population and featuring the most diverse membership. As economies around the world struggle with weak growth, RCEP brings new impetus to post-COVID recovery and regional prosperity, and provides a new opportunity for expanding tourism exchanges and deepening tourism cooperation.

 

The Beijing Declaration of the 14th BRICS Summit, issued on June 23, 2022, states that “we (BRICS leaders) acknowledge the urgent need for tourism industry recovery and the importance of increasing mutual tourist flows and will work towards further strengthening the BRICS Alliance for Green Tourism to promote measures, which can shape a more resilient, sustainable and inclusive tourism sector”. BRICS members are currently taking effective measures, including constructing platforms, promoting dialogue, building policy reserves and conducting stress tests, to follow through on the leaders’ consensus. In this regard, we need to incorporate cross-border visitors traveling for multiple purposes, including business, study, visiting family and friends, medical therapies and beauty cosmetics, into the list of international travelers, rather than focusing only on group travelers holding tourist visas and organized by travel agencies. Such a practice is consistent with the definition stipulated by the UN Statistics Division and the UNWTO. Following a phased, managed and results-oriented approach, countries should prioritize business travels for trade and investment purposes in their efforts to promote international tourism recovery, and minimize the barriers faced by business people in their cross-border (jurisdiction) travels.

 

Business travels arising from trade and investment should and can play a crucial role in the recovery and sustainable development of international tourism. In the first seven months of this year, China’s total foreign trade, imports and exports combined, maintained double-digit growth, and China’s major trading partners were by and large unchanged. ASEAN remains China’s top trading partner, followed by the EU, US, ROK and Japan in the top-five table. In the first half of the year, China’s total trade with “Belt and Road” participating countries and RCEP trading partners expanded by 17.8% and 5.6% respectively. Despite the policy of separating people and goods in some port cities, the revival of trade and investment activities has created strong business travel demands and provided visible market opportunities for travel services, tourism accommodation and convention & exhibition industries.

 

On August 24, the Executive Meeting of the State Council stressed that measures will be taken to “facilitate the entry and exit of business people”. Recently, the Chinese embassies in Brazil, Malaysia, Mexico, Thailand, Singapore and Indonesia have issued public announcements, further optimizing the visa policy for foreigners coming to China: starting from 00:00 Beijing time on August 24, 2022, holders of a valid APEC Business Travel Card[[1]] and foreign students holding a valid residence permit for study purpose will be allowed to enter China. It can be well expected that this small step for APEC Business Travel Card holders will mark a big step forward in opening China’s trade and investment sectors to more business exchanges. In the foreseeable future, business travels between China and ASEAN, between China and BRICS countries, and between China and the “Belt and Road” participating countries will become more convenient, and China’s inbound and outbound tourism market will also move onto the track of steady recovery.

 

II. Improving tourist satisfaction, boosting the gains of the business sector, and promoting international tourism exchanges and cooperation by pushing for the recovery of the domestic market

 

Outbound tourism is an extension of the domestic tourism market, and tourism groups and MSMEs are the guarantee for improving the quality of inbound and outbound tourism services. If a country or a region has not yet fully recovered its domestic tourism market, or resumed the normal operation of its travel agencies, hotels, scenic spots and resorts, high-speed train and airline services, restaurants and shopping centers,and if its visa, immigration, customs, ports, border control and other authorities are not yet ready technically and policy-wise, it would be neither theoretically viable nor practically possible to remove all restrictions on entry and exit. The only viable path is for the tourism authorities and the travel industry to steadily work for the recovery of the domestic tourism market while resolutely implementing the government’s pandemic control policies, and, on this basis, gradually move toward a global consensus on communication and cooperation through multi-track dialogue with international colleagues. In an environment of uncertainties, it is important to present a good story of China’s tourism and work out a consensus through dialogue and exchange: surrendering to the pandemic is not an option, and beating the pandemic without making any hard effort is simply wishful thinking. Only by “holding each other’s hands and fighting together”, can we bring resilient recovery and inclusive growth to the international tourism market.

 

Since the Spring Festival of 2020, the Chinese government has upheld the principle of putting people and life first in the battle against the pandemic, and adopted an approach that focuses on preventing imported COVID cases, containing case recurrence at home, and achieving zero infection on a dynamic basis. Meanwhile, the government has taken steps to reopen the tourism sector and alleviate the difficulties of troubled businesses. From the temporary refund of service quality deposit of travel agencies, to the resumption of intra-province and domestic tourism groups and “air ticket + hotel” business; from keeping the implementation of the “circuit-breaker mechanism of cross-province tours” to the level of county-level jurisdictions, to exercising the rules of daily limit on visitors, ticket reservation and staggered visiting in tourist attractions and resorts; and from investment, fiscal and financial policies such as interest cuts and subsidies, debt extension, rent reduction and exemption, and consumer voucher issuance, to human resources and social security policies such as tax moratoriums, the central and local governments have introduced a series of measures to support travel services, tourism accommodation, tourist attractions and resorts in a way that suits China’s unique national conditions. These policy initiatives have enabled the tourism businesses to get through the tough period. At the same time, the government has worked with education and research institutions, chambers of commerce, industry associations and other non-government institutions to help the players in the tourism market sustain their operation through innovation and embark on digital transformation.

 

During the pandemic, new demands and new forms of tourism business such as local leisure, proximity tourism, culture-tourism integration, heritage revitalization, self-drive tourism, study tours, and camping economy have emerged as new bright spots, and provided strong underpinning for the recovery of the tourism market and innovation of tourism businesses. Many tourism businesses have demonstrated their infinite power of innovation. Here are some notable names: “East of the Forbidden City” by China Tourism Group, “Happy Coast” by OTC, “Holiday Farm” by Ctrip Group, “Forest Resort” by New Century Tourism Group, “Readable Architecture: Micro-tourism in Cities” by Shanghai Spring International Travel Service (Group), “Tent Explorers” by Joyu Group, “Legend of the Yangtze River” by Nanjing Tourism Group, and “Rediscovery” and “Garden Hotel” by Guangzhou Lingnan Business Travel Investment Group. Thanks to the persistent efforts of these tourism businesses, and especially the institutional innovation and active involvement of local governments, the level of tourist satisfaction has stayed above 80 points nationwide.

 

Now matter how many policies are introduced, whether they can stimulate the market is always the most important. To start with, we need to sustain the momentum of pandemic control, so that people can feel safe to travel with quality, and spend on tourism the same way they did in the past. This is the essential condition for market players in travel services, tourist accommodation, tourist attractions and resorts, as well as transportation, catering, shopping and entertainment to get back to business. To forestall local outbreaks of the pandemic during this year’s Mid-Autumn Festival and National Day, the Chinese government has rolled out a series of upgraded and optimized containment measures based on the full implementation of the ninth edition of the COVID-19 Control Protocols. While noting that the public is encouraged to spend the National Day holiday locally, minimize inter-city travels, and obtain 48-hour NAT negative results before boarding long-haul public transportation, all for the purpose of ensuring safety and order of travels, we should not lose sight of the rational side of the pandemic response either, including measures such as “on-arrival COVID testing”, “prohibition of nine excessive restrictions” and “voluntary, free testing for tourists and no restriction on their mobility”.

 

As data suggests, compared to the second half of 2021 when we could see a notable “seesaw” effect between local outbreaks and the prosperity of the tourism market, the impact of the pandemic on the tourism market is notably weakening in both magnitude and scope as we enter the second half of 2022. With pandemic control becoming more well-calibrated and the order of production and life returning to normal, the recovery of the domestic tourism market will be further secured. A domestic tourism market that is able to properly balance pandemic control with tourism recovery will help lay a solid policy foundation for the recovery of the inbound and outbound markets, and cultivate a robust tourism industry for advancing international tourism cooperation.

 

III. Enhancing dialogue between public and private sectors among all countries and regions, and taking practical steps to promote the inclusive growth and sustainable development of international tourism

 

Tourism is a comprehensive industry with strong economic functions and visible market dimensions. Once opening the door of tourism with the key of consumption, we will find that tourism is not only about the economy, but also about politics, society, science, technology, culture and, above all, exchanges and interactions among peoples. China has gained much experience in reopening the tourism sector while enforcing pandemic control, which it is willing to share with countries and regions around the world. China is also ready to draw upon the best practices of other countries and regions in this area. It is simply impossible to achieve resilient, sustainable and inclusive tourism development if countries seek decoupling or, even worse, isolation. For countries, industries and peoples alike, mutual interactions and mutual learning are what we can and must do.

 

According to the data produced by the surveillance program of China Tourism Academy, since 2020, mainstream international media and social media platforms have been closely following the tourism market data during China’s seven public holidays, especially the Spring Festival and National Day holidays, as well as the changes in China’s pandemic control policies. On the whole, the position reflected in these news reports and commentaries is becoming increasingly neutral, and their perspective and viewpoint are also getting more facts-based. While focusing on the impact of pandemic control on the tourism industry, they have also taken the initiative to sum up China’s experience in promoting tourism market recovery and its practices of digital transformation.

 

The initial results of the tourism MSMEs digitization project, organized by China Tourism Academy under the auspices of APEC, point to the fact that the tourism industry has irreversibly entered a modernization process driven by digital technologies. Digitization is no longer a concept that stays only in the book or a technology being simulated in the laboratory, but a real survival ability and driving force for growth. Embracing the digital economy, promoting people-centered mass tourism and modernized smart tourism, and pushing for high-quality tourism development by combining the use of contemporary technologies such as 5G, mobile communications, big data, artificial intelligence, blockchain and meta-universe is a task highly relevant to our times. It is also a question that we must answer and answer well. In this respect, the tourism sector has benefited from several priority projects launched by the Chinese Ministry of Science and Technology, such as “Science and Technology Empowering the Economy 2020” and “Science, Technology and Innovation 2030”. These projects have produced both social and economic benefits, including tourist peak forecast as well as tourist flow control on holidays, ticket reservation for tourist services, contactless hotel services, and immersive live-stage performances. As a matter of fact, the digital transformation of MSMEs and the innovation in business forms jointly facilitated by tourism groups and technology firms are not only an expedient response to the pandemic, but also a necessary pathway toward the sustainable development and inclusive growth of the tourism sector.

 

We have noted that according to the data of the UNWTO World Tourism Barometer: in the first five months of this year, the number of international travels worldwide reached 250 million, an increase of 221% over the same period last year, recovering to 46% of the pre-pandemic level in 2019. As of today, 79 countries and regions have lifted all COVID-related entry restrictions^[[2]]. An even larger group of countries have adjusted or optimized their entry policies. On September 7, Japan started offering the option of “semi-self-guided tours” for international tourists, which means that although they still need to book “flight + hotel” through a travel agency and report their itinerary to the Japanese government, their travel is practically unrestricted after entering the country, and the daily quota for inbound tourists has been raised to 50,000. The Japanese Minister of Land, Infrastructure, Transport and Tourism, who is in charge of tourism affairs, said that “further relaxation is yet to be made” until self-guided travel in its true sense is achieved. More and more countries have come to realize that there will be no real recovery of the international tourism market without absolutely free travel.

 

We have noted that the share of Chinese citizens traveling on tourist visas and under the organization of travel agencies is decreasing year by year in the outbound tourism market, and individual tourists coming to China on self-guided tours also takes up a bigger share in the inbound tourism sector. In assessing the progress of recovery and future direction of the international tourism market, looking at the number of group travelers and the policy directive of the tourism authorities is of course important, but it is also necessary for us to track the changes in the number of cross-border travelers in a broader sense and pay close attention to the operational guidance on the COVID control practices of aviation, immigration and border authorities. At the moment, countries around the world, China included, are all shifting their policies towards the facilitation of international travel, especially business travels, study tours and family visits.

 

We have noted that since the Civil Aviation Administration of China (CAAC) introduced the circuit-breaker mechanism for international passenger flights two years ago, it has adjusted the implementation several times in response to changes in the global pandemic situation and the requirements of pandemic control. On August 7, 2022, the circuit-breaker mechanism for scheduled international passenger flights was further optimized, with the threshold for flight suspension lowered from five cases per flight to 4% of on-board passengers, and the suspension period shortened from two weeks and four weeks to one week and two weeks. Stimulated by this new policy, several international routes operated by Chinese and foreign airlines resumed services during the month. Air ticket reservations went up by 20% and the average price paid for inbound and outbound air tickets dropped by more than 10% compared to the previous month.[[3]] On June 28, the State Council Inter-agency COVID Control Mechanism released the ninth edition of the COVID-19 Control Protocols, reducing the isolation period for close contacts, inbound personnel and Chinese nationals returning from overseas from “14-day centralized isolation + 7-day at-home health monitoring” to “7-day centralized isolation + 3-day at-home health monitoring”. Meanwhile, the measures for nucleic acid testing have also been notably streamlined. Reviewing the evolution of the isolation policy for inbound tourists in the past three years, we have every reason to be optimistic that a more well-calibrated COVID control policy will be adopted for inbound and outbound travels in the fourth quarter.

 

With the building of policy reserves, and the experience gained in conducting stress tests and well-calibrated COVID control, the steady recovery and gradual rebound of China’s inbound and outbound tourism market is expected to occur around the end of the year. The window of opportunity is opening, and now is the time for some serious preparations.