Tourism, Where China's Trade Deficit Grows

I remain surprised that tourism is not very well-studied in IPE considering that it is one of if not the world's largest industry. It's certainly big money on a global basis, providing much employment to people in developed and developing nations alike and reportedly accounting for 9% of global GDP. So, let use consider the fate of China and its particular industry. As it opens up to the world, the exchange of travelers has quickened. There's interesting stuff in the Nikkei Asian Review--fast becoming one of my go-to sites for Asia-related news--on Chinese tourism. To be sure, tourism to China is big business since it the world's third most-visited country in terms of tourism arrivals after France and the United States. That said, there are more and more Chinese journeying out of their country than foreigners coming to visit it. Voila! Tourism is one of the few industries in which the PRC runs a trade deficit relative to the rest of the world. The bad news is exacerbated by the horrific images of pollution in Beijing as well as the gradually strengthening yuan that is making it more expensive to visit:

Fewer foreign tourists are going to China these days, their numbers being dragged down by severe air pollution, a strengthening currency and food safety problems. According to the China National Tourism Administration, the number of overseas visitors who visited and stayed at least one night in mainland China, including tourists from Hong Kong and Macau, totaled 55.69 million in 2013, down 3.5% from the previous year.

Actually, Chinese authorities have been trying to bolster tourism to China by granting transit permits for visitors. To date, however, various tourism-related businesses have not reported a substantial increase in their revenues from the program:

In January 2013, Beijing, Shanghai, Guangzhou, Chengdu and Chongqing introduced a program for transit passengers from 51 countries. The program allows travelers to stay in China visa-free for up to 72 hours provided they restrict themselves to the city they landed in. The system was launched with great fanfare, but the number of first-year users in Beijing was 14,000, far short of the municipal government's goal of 20,000.

Dalian and Shenyang, in Liaoning Province, introduced the same system last month. At the end of 2013, the two cities posted an electronic ad in New York's Times Square, hoping to get New Year's Eve revelers thinking about quick trips to China. Did it work? Not yet, according to a sales manager at a five-star hotel in Dalian. "There has been no sign of our room-utilization rate picking up," the manager said.

Make no mistake: the rest of the world is rolling out the red(s) carpet to attract foreign tourists, too. This industry is very competitive, and unfortunately, it seems the gweilo (foreign devils) have the upper hand so far:

Meanwhile, overseas travel by Chinese has been growing much faster than expected. The China National Tourism Administration stated that the number of overseas travelers rose 18% in 2013, to 98.19 million. Some countries have been redoubling their efforts to attract Chinese tourists. France set up a system so Chinese can obtain tourist visas within 48 hours of applying. The new system was in place before the Chinese New Year holidays, which began Jan. 31. The simplified process beats similar systems in the U.K. and other countries by three days.

China's tourism situation is leading to a deficit in its travel services balance, a component of the current-account balance: the amount of money spent overseas by tourists of a country, China in this case, subtracted from the amount of money spent by foreign tourists in that country. It is calculated based on the costs of lodging, eating and getting around.

I guess the Chinese have quite a lot of things to sort out at home to bring those foreign tourists back.