China Tourism Spend Analytics: Outlook and Forecast to 2026

Does the name ‘Middle Kingdom’ ring a bell? If not then that of the world’s most populous country and its second largest economy certainly would! China was the world’s richest nation till the middle Ages and had the rest of the planet beating a path to its door. The country invented paper, silk, gunpowder and was the home of one of the most ancient civilisations. While largely closed off during the era of Mao Zedong to outsiders, the reforms of 1979 began to open up the country to business and tourism dramatically. The emergence of a domestic middle class the size of the U.S. along with the easing of travel restrictions helped in no small part. Today, China has become one of the most lucrative and watched inbound and outbound tourist destinations in the world.

China Tourism Spend Analytics: Drivers and Restraints

There are several reasons that drive the Chinese tourism sector. They include a rising disposable income among Chinese consumers leading to a 300 million+ strong middle class spurring domestic tourism. The focus of the government on infrastructure development including a high-speed rail network, national highways, new airports and ports also streamline both domestic and international travel. In addition to this, the rich history of China, its spectacular natural wonders, along with world-class cities like Beijing and Shanghai help attract droves of tourists to the country.

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China has almost limitless tourist treasure troves and can easily become the largest tourism destination in the world. However, two main factors limit the Chinese tourism sector from reaching the pole position. They are pollution and regional political tensions. Unfortunately, China’s rapid economic growth of the past three decades has come at a terrible cost to the environment. Cities like Beijing and Shanghai are notorious for their smog and the government has even declared a state of emergency in the national capital several times to combat this. Overseas visitors will rarely travel to a country with potential health risks. Many of them come to see the natural beauty of mountains, lakes and ancient architecture, which can be quite challenging in heavy smog. A large number of tourists to China come from neighbouring countries like Japan, South Korea, and Taiwan. Political tensions due to historical disputes can force both governments to impose visa restrictions on the other. This makes it difficult for their nationals to visit this beautiful country.

China Tourism Spend Analytics: Forecast

As per the World Travel & Tourism Council ‘Economic Impact 2016 China’ Report, the direct contribution of tourism to the GDP was CNY 1407.9 billion (2.1% of the GDP) in 2015. This is anticipated to rise by 7.4% p.a. from 2016-2026, amounting to CNY 3064.3 billion (2.6% of GDP) by the end of the decade. Leisure travel spending accounted for 79.3% of the T&T GDP in 2015 compared to just 20.7% of business travel spending in the year. Leisure travel spending is forecast to rise to CNY 5607.3 billion in 2026, while that of business travel spending will be CNY 1727.3 billion in the year 2026.

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The total contribution of travel and tourism to the Chinese GDP was CNY 5,366.4 billion (7.9% of GDP) in 2015. This will probably rise by 7% p.a. to reach CNY 11,225 billion (9.4% of GDP) by the year 2026. Domestic tourist spending accounted for the lion’s share at 88.6% of the direct T&T GDP in 2015 v/s 11.4% spent by foreign tourists. Domestic spending is predicted to grow to CNY 6930.4 billion in 2026. Visitor exports in the year 2015 generated CNY 384.6 billion (2.6% of the total exports). This is expected to grow by 0.3% p.a. from 2016-2026 to culminate in CNY 404.2 billion by 2026. According to WTO data, China received 56.9 million international tourists in 2015 which makes it the most popular tourist destination in Asia and the fourth most popular in the world. China is expected to attract more than 78 million tourists by the year 2026.

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