Tourism to Play a Crucial Role in China's Consumption and Growth

"This positive economic trend has set the stage for a promising future for the tourism sector, providing investment opportunities in this space," said Victoria Mio

Tourism in China has been growing rapidly, playing a crucial role in the country's overall consumption mix. The government's recent release of growth data, showcasing a 5.3% increase in GDP during the first quarter of this year compared to 2023, has exceeded market expectations. This positive economic trend has set the stage for a promising future for the tourism sector, providing investment opportunities in this space.?

Holiday Tourism

As the May Day holiday approaches, China is gearing up to welcome a substantial influx of tourists. The tourism industry is poised to capitalize on this period by consolidating its recovery and surpassing pre-pandemic levels of activity. By stimulating consumption, the sector may invigorate the country's economy.?

Various indicators suggest a strong demand for travel within the country. For instance, domestic airfare orders for the upcoming holiday have surged by 21% compared to 2023, representing a remarkable 41% increase over the figures from 2019, according to Umetrip data*. This surge in air travel bookings indicates a high level of enthusiasm among domestic travelers. ?

Hotel bookings in smaller county-level cities have also experienced significant growth. On the Chinese travel platform Ctrip*, hotel orders for these cities have risen by an impressive 68% year-on-year. Additionally, ticket purchases for scenic areas in these towns have skyrocketed by 151% during the same period. These figures reflect a strong desire among tourists to explore lesser-known destinations and experience local attractions.?

Inbound Tourism Stimulates Growth

Furthermore, the Chinese government has implemented measures to attract international tourists. This includes expanding the list of countries whose nationals can enter China without a visa and broadening the acceptance of international credit cards on payment platforms. Permanent visa-free travel arrangements with countries like Singapore, Malaysia and Thailand have further enhanced China's appeal as a tourism destination, attracting a diverse range of visitors.?

Inbound tourism has also seen a significant boost. Data released by the National Immigration Administration in March indicates that inbound travelers reached 2,945,000 during the first two months of this year, which is 2.3 times higher than the figure recorded in 2023*. This surge in international visitors demonstrates China's growing popularity as a global tourism hotspot.?

Building upon the enthusiasm witnessed during the previous year, industry experts expect the May Day holiday tourism to continue its upward trajectory. With the optimistic economic outlook and the country's efforts to promote domestic and international travel, the tourism sector is poised for sustained growth, further contributing to China's overall economic development.

*Source and Reference: South China Morning Post's article titled, "China preps for tourism boom on May Day holiday as early bookings rocket pass pre-pandemic levels"

About Victoria Mio: Victoria is the Head of Greater China Equities and Portfolio Manager of Janus Henderson Investors. She has over 25 years of experience in portfolio management, equity research, and team leadership. Victoria has strong global perspective through working in top European and American asset managers for two decades. She is regarded as established investment spokesperson on China and Asia, sustainable investment, and market trends.