Since reopening its borders in 2023 after three years of Covid-19 isolation, China’s travel economy has been slowly recovering. While domestic travel and high-speed rail have experienced growth, international trips in and out of the country are still lagging behind, with flight capacity at just two-thirds of pre-pandemic levels.
The economic implications are significant, as Chinese travelers were the world’s biggest spenders before the pandemic, contributing to 20% of global tourism spending, according to the United Nations World Tourism Organization.
Efforts have been made by the Chinese authorities to encourage more inbound travel. Changes include waiving travel visas or extending the length of visa-free travel for visitors from eight countries, such as Germany and France.
However, the main obstacle to international travel for Chinese citizens remains China’s economy itself. While the country’s economy has rebounded from the pandemic, a severe real estate downturn has impacted consumer spending and confidence within China. Additionally, ongoing global geopolitical tensions, particularly trade disputes with the United States and Europe, have also affected travel.
China implemented some of the strictest travel rules during the pandemic. Overseas travelers who managed to enter the country often had to undergo self-funded quarantine for up to two months.
As of December 2023, international flight capacity to and from China was only 62% of what it was in December 2019, according to flight data analytics firm OAG. On the other hand, domestic travel has seen an uptick, with the number of domestic flyers exceeding pre-pandemic levels by nearly 10% during a recent three-day weekend.
At the beginning of 2023, China had approximately 500 international flights per week. That number has now grown to around 4,600, and it is expected to increase to 6,000 by the end of this year, reaching about 80% of pre-pandemic levels.
A crucial period for China’s travel economy will be around the Lunar New Year in February 2024. It is traditionally a time of heavy travel as millions of workers journey to their hometowns. To accommodate the surge in spring festival visits, Chinese airlines are planning an additional 2,500 international flights, according to the country’s aviation regulator.
High-speed rail has become increasingly popular for domestic travel within China. The national rail operator, China State Railway Group, reported that rail trips surpassed 20 million at the start of the Golden Week holiday in October, a notable milestone. Throughout the year, the average daily number of passenger trips exceeded 10 million.
Despite the ongoing recovery, most analysts predict that a full rebound in international travel won’t occur until 2025. Economists at Nomura highlighted that the pace of the sector’s recovery will largely depend on Chinese travelers’ willingness to spend. Delays in issuing visas and passports, which persisted through 2023, have now been resolved.
While supply-side constraints have eased, the demand-side drag is starting to take effect, with significant headwinds forecasted for China’s outbound tourism recovery in 2024 and possibly 2025, according to Nomura economists.
In conclusion, China’s travel economy is slowly making a comeback. Domestic travel and high-speed rail have seen positive growth, but international travel still lags behind. The recovery is influenced by factors such as China’s economic conditions, global geopolitical tensions, and consumer confidence. The country continues to implement measures to boost inbound travel, but a full restoration of international travel is not expected until 2025.
