On January 8th, travel restrictions for tourists arriving in China were lifted. Its citizens are now able to renew their passports to travel abroad. Thus ended the ‘zero-covid’ rule that prevailed during the last three years. In 2019, roughly 155 million Chinese tourists traveled abroad, exceeding the average of the previous 10 years.
According to a recent McKinsey survey, 40% of Chinese travelers said they wanted their next trip to be international, with Australia/New Zealand, Southeast Asia, and Japan being the most desired destinations. Roughly 20% of travelers’ passports have expired during the pandemic. Renewals are now possible, but the backlog will slow travel’s rebound by a few months.
The World Tourism Organization (WTO) estimates that 57% of Chinese tourists’ spending abroad this year will be on shopping and eating out, with a 10-point increase, or perhaps more, expected over the next two years. Trip.com, China’s leading travel agency, forecasts a 250% rise in overseas bookings as of January 8; and estimates at the same time that airfare sales to Europe and the U.S. will triple in the second half of the year from their record 2019 levels.
McKinsey Asia Travel estimates that the level of Chinese overseas tourism achieved in 2019 will fully recover from May 2023 onwards, and from there grow at an accelerated rate above the levels of 4 years ago, because the pandemic-induced shortfall in this period has also been a truly extraordinary source of savings.
Domestic consumption in China seems to be soaring, driven in part by a veritable explosion of domestic tourism. The City Bank of China forecasts an increase of 11% compared to last year, which means more than US$7 billion, or one third of the increase in the GDP of the People’s Republic per year.
Foreign banks estimate that in the next three months, the crisis caused by pandemic would be completely overcome. International and domestic tourism would recover 2019 levels, and from there on it would tend to grow rapidly.
Four years ago Chinese tourists spent abroad more than US$280 billion; and invested in luxury goods more than US$90 billion, by far the highest figure in the global system. The number of business trips abroad is also expected to multiply. In December alone, more than 15 major Chinese cities hired charter flights to take their companies to sell in Europe and the Middle East.
Chinese travelers abroad come from a middle class of more than 500 million people, with incomes comparable to those of Americans (US$40,000/U$S 50,000 per year), which are increasing by 8.1% per year.
The disposable income of the middle class is increasing by 15.5% per year; and as a sign of the civilizing aspect of capitalist accumulation, there is a growing tendency among Chinese consumers to invest in cultural goods, such as more advanced education, travel and language skills. A phenomenal boom in mergers and acquisitions (M&A) of Chinese companies abroad, especially in industrial and high-tech activities, is also expected in the world economy.
According to McKinsey, less than 100 Chinese airplanes sit currently in hangars, while more than 200 large aircraft can be brought back to service quickly for international journeys.
