China tourism

The road to recovery for Chinese outbound tourism

  • The Economist Intelligence Unit now expects China to have vaccinated 60% of its population by the second quarter of 2022. However, under its precautionary approach, the government will not immediately relax quarantine requirements for tourists returning from overseas.
  • The government will not relax these quarantine requirements until late 2022, first for travellers returning from Hong Kong and Macau, followed in 2023 by other countries, depending on their risk level.
  • We expect outbound tourism to return to pre-pandemic levels in early 2024.
  • Chinese tourists will be drawn to countries that they see as safe and which offer an easy visa application process. It will be more convenient for them to travel to countries that recognise Chinese vaccines.

Before the onset of the coronavirus (Covid-19), China was the world’s largest spender on global tourism. According to the UN’s World Tourism Organisation (WTO), Chinese tourists spent US$254.6bn overseas in 2019, accounting for almost one-fifth of global tourism spending. The number of outbound Chinese tourists rose by 12.8% a year on average in 2009‑19, compared to the global average of 5.1%. However, that momentum was hit hard by the pandemic in 2020. Hong Kong, Macau and Thailand, which were previously Chinese tourists’ top destinations, respectively recorded drops of 93.8%, 83% and 88.6% in Chinese tourists in 2020.

The government will maintain its “zero-Covid” approach

The recovery of Chinese outbound tourism will depend on the rollout of vaccines, both in China and globally. Under our core forecast, we expect China to achieve widespread vaccination (60% of its population) in the second quarter of 2022. However, we do not expect the government to relax quarantine requirements for tourists returning from overseas immediately once widespread vaccination is achieved.

The government will take a precautionary approach, especially given that vaccines do not offer complete protection against Covid‑19. If Chinese tourists bring the coronavirus back into the country, the government would reintroduce strict quarantine requirements immediately, because of its zero-tolerance approach to the disease; its goal is to eliminate any trace of the virus in China, rather than live with it. We forecast that only necessary business travel and family visits, which accounted for around 8% and 4% of outbound travel respectively before the pandemic, will resume in 2022.

The quarantine requirements for people returning from Hong Kong and Macau will probably be lifted first, as those two territories are special administrative regions of China. The government is likely to do this in the fourth quarter of 2022. Given the territories’ proximity to China and relative success in controlling the virus, we expect tourism flows to rebound to pre-pandemic levels by the second quarter of 2023, and to return gradually to their pre-crisis potential. Before the pandemic, around 42% of Chinese outbound tourism was to Hong Kong and Macau.

The recovery of tourism flows to other destinations will be more protracted, as the Chinese authorities will take more time to gauge their safety for Chinese travellers. We do not expect quarantine requirements for travellers returning from other places to be relaxed immediately after they have achieved widespread vaccination. It will take around nine months for tourist numbers to return to pre-pandemic levels after the border opens, as travellers’ concerns about safety will not dissipate straight away. The first group of countries to record a recovery in Chinese visitors will be developed economies, as they will be the first to achieve widespread vaccination. According to our timeline, total Chinese outbound tourism flows will surpass pre-pandemic levels in the first quarter of 2024, but will not recover to their potential by the end of our forecast period (2021‑25). This is because vaccine rollouts will be prolonged globally, especially in middle- and low-income countries, with some economies not achieving widespread vaccination until 2023 or later.

Attracting Chinese tourists in the post-pandemic era

Chinese tourists’ preferences are likely to shift in the wake of the pandemic, meaning that some countries may capture a higher market share than before. We have developed a matrix to score countries that were major destinations for Chinese tourists before the pandemic to evaluate their attractiveness once restrictions are lifted. All of the places listed in the matrix had direct flight connections to China before the pandemic—a prerequisite to attract tourists in the post-Covid era, as flight transfers will be deemed as more risky.

Chinese tourists are initially likely to choose to travel closer to home (namely destinations in Asia) out of safety concerns. They are likely to pick destinations that have a good track record of managing the coronavirus, high vaccination rates and good healthcare and medical resources. They may also consider other risk factors, such as whether a country is an attractive destination for other high-risk foreign arrivals. The visa policy of the destination market will be another determining factor. Other governments’ recognition of Chinese vaccines is a good indicator of which will be willing to welcome Chinese visitors.

We calculated a weighted average score for each country in the matrix, and found that developed countries in Asia will be the favourite destinations among Chinese tourists once the country opens its borders. They are helped by the ease of their (pre-pandemic) visa-application processes for Chinese citizens; a relatively low incidence of the coronavirus; the low risk posed by the other main sources of tourists to those places; and their recognition of Chinese vaccines. However, Cambodia’s slow vaccine rollout means that the Chinese government is unlikely to resume flights to the country until 2023. Laos, the UAE, Malaysia, Thailand and the Maldives also score well in our matrix. The UAE and the Maldives will benefit earlier because of their faster vaccine rollouts.

Diplomatic relations may also play a role. China’s strained relationship with the US, Australia and Taiwan will weigh on Chinese tourism flows to those territories. This suggests that countries which have similar tourism offerings, such as New Zealand, will benefit at their expense.

In the post-pandemic era, Chinese tourists will remain a major driver of growth in the global tourism industry, because of the country’s huge population and the expected boom in its middle-income group. However, companies should note that low- and middle-income urban households suffered relatively large income losses from the pandemic-induced economic slowdown. Therefore, before growth in Chinese outbound travel recovers fully to its pre-Covid trend, most demand for travel will come from high-income vaccinated groups. The authorities are likely to approve smaller, customised tours overseas before large group tours, as they are easier to manage and pose a lower risk. Tour companies should therefore target such groups and introduce measures to make their members feel safe and protected on their trip.

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