China’s travel economy is slowly getting back on track. This is where it stands.

China's travel economy is slowly getting back on track.  This is where it stands.

As China reopens its borders in 2023 after three years of Covid isolation, domestic travel is booming and high-speed rail has become increasingly popular. But international travel in and out of the country is lagging, and flight capacity is still only a third of pre-pandemic levels.

The economic stakes are high. Before the pandemic, Chinese travelers were the world’s biggest spenders, accounting for 20 percent of global tourism spending, according to the United Nations World Tourism Organization.

In the past year, Chinese authorities have attempted to encourage more internal travel. Among the changes: China has waived travel visas or agreed to extend the period of visa-free travel for visitors from eight countries, including Germany and France.

The main factor restricting international travel by Chinese will continue to be China’s economy. Growth has bounced back after the pandemic, but the burden of a severe real estate downturn has weighed on consumer spending and confidence inside China. And global geopolitical tensions remain a wild card. China is embroiled in trade disputes with the United States and Europe, home to many major multinational companies. Since they think twice about their business in China, travel is affected.

Here’s what you need to know about the state of China’s travel economy.

During the pandemic, China imposed some of the strictest travel rules in the world. Foreign travelers who managed to enter the country sometimes had to quarantine for up to two months at their own expense.

As of December, international flight capacity – essentially the number of seats available on flights to and from China – was only 62 percent compared to December 2019, according to flight data analytics firm OAG. But domestic travel has picked up, with the number of passengers traveling about 10 percent above pre-pandemic levels.

At the beginning of last year, there were only about 500 international flights into China each week, according to the Civil Aviation Administration, China’s aviation regulator. There are now about 4,600, and the number is expected to rise to 6,000 by the end of the year – about 80 percent of pre-pandemic levels.

A bigger test next month will be during the Spring Festival around the Lunar New Year, typically a heavy travel period when millions of workers travel to their hometowns. Chinese airlines will Schedule 2,500 additional international flights To accommodate spring festival trips, China’s aviation regulator said last week.

China’s transport officials said they expect 480 million rail trips to be taken during a 40-day travel surge around the Spring Festival in the weeks before and after the Lunar New Year, up about 40 percent from last year .

High-speed rail has become a more popular way to travel within the country. China State Railway Group, the national rail operator, said rail trips exceeded 20 million at the start of the Golden Week holidays in October, a high level, and the average daily number of passenger trips throughout the year exceeded 10 million. Went.

Most analysts said they believe a full resumption of international travel will not occur until 2025.

In a January research note, economists at Japanese bank Nomura said the pace of the sector’s recovery will be largely determined by how much Chinese travelers are willing to spend. Pandemic-era problems such as delays in issuing visas and passports, which will continue until 2023, have been resolved.

“While supply-side constraints have eased, demand-side pullbacks are now beginning to ease and remain major obstacles to China’s outbound tourism recovery in 2024 and possibly 2025,” Nomura economists wrote.

In December, China began allowing visitors from France, Germany, Italy, Spain, Malaysia and the Netherlands to visit for up to 15 days without a visa, a change that will last until November 2024. China’s National Immigration Administration said 147,000 visas had been granted. The first six and a half weeks of the program. China also signed an agreement to make visa-free travel more accessible for tourists from Thailand and Singapore.

For Americans, visa applicants will no longer be required to submit documents such as hotel booking records, itineraries or invitation letters. Authorities have also cut all visa application fees by 25 percent until the end of the year.

It has also become easier for foreigners to pay for things when visiting China. Last July, the main payment platforms, WeChat Pay and Alipay, said they would support foreign credit cards and allow visitors to pay like locals. China has moved away from paper currency and coins, a trend that has accelerated during the pandemic.

Flights between China and the United States have only gradually resumed. Before the pandemic, there were more than 300 flights every week between the two countries. The number was 36 per week in September and has gradually increased. In November, the countries agreed to increase flights to 70 per week.

Poor Sino-US relations will remain hidden in the background of China’s international travel.

The US State Department maintains a “Level 3” travel alert on China, warning Americans to “reconsider travel” to the country due to “risk of wrongful detention”, among other reasons.

China’s Foreign Ministry has own travel information, warned that travelers to the United States were “harassed and interrogated” at the border under “various pretexts” and that Chinese citizens were arbitrarily arrested and prosecuted.

The changing preferences and disposable income of Chinese travelers could shape the recovery of the travel economy.

“As Chinese households have become more price-sensitive and rational, domestic tourism is more preferred, as it generally requires less time and money,” said Ying Zhang of the Economist Intelligence Unit, a research business.

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