Commentary: Chinese tourists are travelling again, but mostly in their own country

JOONDALUP, Australia: China’s tourism sector is once again making headlines, but this time the buzzwords are “domestic travel”.

Before COVID-19 brought much of the world to a standstill, China was the biggest tourism source market in the world, making 155 million overseas trips in 2019 and spending a collective US$255 billion. That same year, Chinese tourists also made more than 6 billion domestic trips, supporting jobs and businesses across China. The travel and tourism sector then accounted for 11.05 per cent of China’s gross domestic product.

After the pandemic, as borders re-opened and travel restrictions were lifted, the world waited eagerly for Chinese travellers and their tourist dollars to return. They’re still waiting.  

Don’t get me wrong. Chinese tourists are indeed travelling, and the industry is once again gaining worldwide attention. However, the recovery pattern varies across the three different aspects of tourism: Domestic, inbound and outbound.

In 2023, Chinese tourists took 87 million trips abroad, which works out to about 56 per cent of the 2019 figure. Meanwhile, domestic travel logged 4.9 billion trips, nearly 82 per cent of the pre-pandemic figure. As for inbound tourism, China welcomed 35.5 million foreign visitors in 2023, representing less than 40 per cent of pre-pandemic levels.

All this to say - Chinese tourists are travelling again, but they’re preferring to explore their own country.  

DOMESTIC TOURISM: A STIMULANT FOR ECONOMIC GROWTH

China's tourism sector is critical not only for the country’s economy but also for the global economic landscape. The sector drives consumption, which is crucial as the world grapples with economic slowdowns.

In recent years, the Chinese government has placed significant emphasis on encouraging domestic tourism to stimulate economic growth.

With China’s economy slowing down - it grew 4.7 per cent in the second quarter this year, down from the previous quarter’s 5.3 per cent growth - boosting tourism service consumption has become a priority.

Domestic tourism helps drive demand-side economic growth, providing a compensatory consumption boost after the curbed demand during the pandemic. Urban residents, facing increased social pressures, now see tourism as an indispensable consumption choice.

Leaving behind the urban hustle and bustle, they seek both mental and physical rejuvenation through sunny beaches and refreshing scenery. Despite the potential shrinking of household incomes, middle-class families in China still have disposable income for domestic vacations. For those with young kids, family vacations provide opportunities for parents to both bond with their children and educate them. Even when parents are unable to accompany their children on a tour, they would spend money to send them on a summer or winter vacation “study tour”.

Furthermore, the development of the high-speed rail system and rise of online travel apps like Ctrip, Qunar, Mafengwo, have greatly facilitated domestic travel convenience. Young travellers in China are becoming more explorative, seeking novel attractions and niche, immersive tourist experiences. The rise of user-generated short travel videos on social media and travel live streaming have also propelled the popularity of lesser-known destinations among netizens.

As a result, official figures released on Jul 26 show that around 2.73 billion domestic trips were made between January and June this year, an increase of 14.3 per cent from the same period last year. Domestic travellers spent 2.73 trillion yuan (US$378 billion) on tourism activities, up 19 per cent. By the end of the year, domestic travel spending alone is projected to reach new heights, contributing 6.79 trillion yuan to the economy.

This surge underscores the robust recovery and growing importance of domestic tourism in China. This year, the travel and tourism industry is projected to account for at least 9 per cent of the GDP, according to the China Tourism Association.

INBOUND TOURISM: THE SLEEPING GIANT AWAKENS

As domestic travel booms, China's inbound tourism is also gradually recovering.

The tourism authorities have been preparing for this since 2023, offering unilateral visa-free entries for tourists from more than a dozen countries including France, Germany, and most recently Australia and New Zealand. Nationals holding ordinary passports from those countries can enter China without a visa for up to 15 days. Additionally, China has reached mutual visa exemption with another seven countries including Singapore and Thailand.

Meanwhile, foreigners from 54 countries such as the United States, Canada, and Britain are also eligible for the 144-hour visa-free policy for leisure travel and business visits.

These policies have significantly boosted the number of foreign tourists visiting China.

Immigration data logged 14.64 million inbound trips made by foreigners into China in the first half of this year, up 152.7 per cent year-on-year. More than half, or 8.54 million entered China visa-free, representing a year-on-year surge of 190.1 per cent.

The top destinations for inbound tourists include major cities like Shenzhen, Shanghai, Guangzhou and Beijing, with tourists mainly coming from South Korea, the United States and Singapore.

According to a recent report by the China Tourism Academy, China's inbound tourism market this year is expected to recover to about 80 per cent of its pre-pandemic level.

OUTBOUND TOURISM: A SLOWER PATH TO RECOVERY

Amid heightened geopolitical concerns, stiff travel restrictions for state employees and rising costs, outbound travel is not expected to return to pre-pandemic levels until 2025, according to The Economist Intelligence Unit.

Several factors exacerbate this lag, including reduced disposable income among the Chinese middle class following the pandemic and a downturn in the property market.

Additionally, economic slowdowns and the appreciation of foreign currencies due to inflation in popular destinations further deter outbound travel.

In 2019, Chinese outbound tourism spending reached US$254.6 billion, but by 2023, this figure had dropped to US$196.5 billion.

Despite this, data from Chinese online travel agencies show a significant rise in outbound travel queries and bookings for the summer of 2024, driven by visa facilitation policies. For instance, searches for Kuala Lumpur surged by 49 per cent week-on-week after China and Malaysia announced plans in June to extend visa exemptions.

Short-haul destinations in East and Southeast Asia, such as Thailand and Malaysia, are likely to benefit more from China’s outbound tourism. Countries offering visa-free policies to Chinese citizens are expected to see increased tourist inflows.

Take Singapore, for example, where China has reclaimed its spot as its largest source of tourists once again, thanks to a mutual visa-free entry policy that took effect in February. About 1.45 million visitors from China travelled to Singapore between January and June, surpassing Indonesia’s 1.3 million visitors.

Overall, China’s tourism industry remains a significant economic driver in the new geopolitical era. It deserves close attention from governments, policymakers, investors and industry practitioners as it continues to navigate the post-pandemic landscape.

Sam Huang is Professor of Tourism and Services Marketing in the School of Business and Law at Edith Cowan University, Australia. Before entering academia, he worked as a government official in Beijing at China National Tourism Administration. He is also a founding fellow of the International Association for China Tourism Studies.