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Print Edition> Business
UPDATED: October 13, 2014 NO. 42 OCTOBER 16, 2014
Market Watch


A Widening Tourism Deficit

During the week-long National Day holiday (October 1-7), nearly 480 million tourist trips were made by Chinese people, a year-on-year increase of more than 10 percent, according to the latest survey from the China Tourist Academy. The figure 480 million represents a larger number than the populations of Germany, France, U.K., Italy, Spain and Japan combined.

Why do an increasing number of Chinese people travel during the holiday? There are three major reasons. First, Chinese people's income has been continuously on the rise. Last year, the per-capita disposable income of urban residents reached 26,955 yuan ($4,392), up 7 percent with the inflation factor deducted. Second, infrastructural conditions have been profoundly improved in the country, with more highways and railway routes being open to traffic. Last year, newly completed highways totaled 8,268 km, making the total length of China's highways 104,400 km, the longest in the world. Finally, more Chinese families own cars and self-driving tours have become increasingly popular.

A substantial increase in tourism spending helps to alleviate China's reliance on investment-and export-driven growth. It's a sign of the country's increasing domestic demand and an inevitable trend in the course of restructuring the Chinese economy.

With more people traveling within the country's borders, the number of Chinese citizens who opt to travel overseas is increasing even faster. In 2013, Chinese people made 98.19 million overseas trips and spent $128.7 billion when traveling abroad, ranking first in the world. Overseas trips by Chinese tourists are expected to reach 114 million in 2014, up 18.2 percent. China has not only become the largest source country of overseas travelers, but also a generous consumer, with per-capita spending of $1,368 during overseas travels, three times that of travelers from other countries.

In sharp contrast, China has become a much less attractive travel destination to foreigners than before. The number of foreign travelers to the country has stagnated and even decreased year on year. According to data from China National Tourism Administration, only 4.9 million foreigners traveled to China in the first half of 2013 and that figure declined by 227,700 in the first half of 2014.

China experienced $4-billion tourism deficit in 2009, the first deficit ever in history. This deficit reached an astounding $76.9 billion in 2013 and is expected to exceed $100 billion in 2014.

It appears that foreigners are getting less and less fond of traveling to China. A report issued by the World Economic Forum says that China's overall competitiveness as a travel destination was ranked No.45 in the world in 2012, down by six spots compared to 2011.

The dampening of foreigners' enthusiasm for traveling in China is foremost because of the overcrowded tourism spots. This not only stands in the way of an enjoyable travel experience but also greatly affects the quality of services in accommodation and food. Environmental pollution in China has terrified foreign visitors. The frequent occurrence of food safety incidents has generated doubts toward Chinese food amongst potential travelers too. Finally, the outbreak of the global financial crisis has reduced the income of tourists and their expectations of future income, as evidenced by China experiencing its first ever tourism deficit in 2009, the year after the crisis broke out.

How should we interpret this trend? The tourism deficit won't cause serious problems owing to the enormous trade surplus that China currently possesses. China's trade surplus reached $259.75 billion in 2013, up 12.8 percent. Even if the tourism deficit reaches $100 billion in 2014, it won't change the overall trade surplus. In addition, as more Chinese spend heavily during overseas travels, more transactions will be made using the yuan, which will boost the currency's internationalization.

However, we should reflect on factors that have stopped more foreign travelers from coming to China. What matters most is how to sustain and carry forward China's long-standing historic and cultural heritage, how to maintain its diversified folk customs, and how to keep scenic spots clean and beautiful. Governments at all levels and the public should spare no efforts in tackling pollution and closing loopholes in food safety supervision.

This is an edited excerpt of an article published in Securities Times


480 mln

Number of Chinese travelers during the National Day holiday (October 1-7), up 10.9 percent year on year

245.3 bln yuan

Tourism revenue during the week-long National Day holiday, up 15.7 percent year on year

$14 bln

Investment that General Motors will make in China over the next four years to increase its annual sales in the world's largest car market to nearly 5 million vehicles

$200 mln

Amount of money that China's car rental company eHi Car Services plans to raise in an upcoming IPO on the New York Stock Exchange

$1.95 bln

Amount of money for which China's Anbang Insurance Group Co. has acquired the famous Waldorf Astoria New York hotel


Growth in profits of industrial enterprises above a designated size—principal business revenue of more than 20 million yuan ($3.15 million)—during the January-August period


"The People's Bank of China and local governments will weed out financially unsustainable local government funding vehicles while giving support to those in sound condition."

Guo Qingping, Assistant Governor of the People's Bank of China, the central bank, speaking to a press conference on October 8

Email us at: yushujun@bjreview.com

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