China’s slowing economic growth, a trade war with the US and weakening currency are causing significant declines in spending by its tourists overseas.

Chinese people made 150m border crossings last year and are crucial to the global travel market, accounting for about a fifth of tourism spending worldwide, according to the United Nations’ World Tourism Organization.

But they spent 10 per cent less outside the country in the first quarter compared with the same period last year, according to official data. Industry executives and analysts say China’s slowing economic growth combined with the depreciation over the past year of its currency, partly as a result of the trade war with the US, are to blame.

That is causing them to favour domestic travel or to downgrade to cheaper trips. “Middle-class travellers will choose cheaper travel options,” said Peter Liao, who operates a travel agency in Shanghai specialising in European trips. “The exchange rate is a factor. It is getting difficult for tour operators to fill up their more expensive packages.” 

Popular destinations for Chinese tourists such as Thailand and Vietnam have reported low single-digit declines in Chinese visitors this year while some long-haul destinations are reporting more dramatic falls.

Visits from China to New Zealand fell 21 per cent in April compared with the same month a year earlier.

In Australia, arrivals from China fell 6 per cent in April. China overtook New Zealand as the largest source of travellers to Australia last year when they spent A$12bn ($8bn) in the country — more than a quarter of total spending by international visitors. 

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Air China axed its Sydney to Shanghai and Melbourne to Shanghai routes in March. “We are undoubtedly starting to see slower rates of growth as the market matures,” said John O’Sullivan, managing director of Tourism Australia. 

Chinese visits to the US fell nearly 10 per cent year on year in 2018 to 2.9m, according to the country’s tourism office, after Washington’s imposition of tariffs on Chinese exports caused the renminbi to depreciate against the dollar. 

American businesses indicate the slowdown has continued this year. US jewellery brand Tiffany this month told investors that domestic sales to Chinese tourists declined more than 25 per cent in the first quarter. Beijing last month issued a warning on travel to the US. 

Some destinations closer to home, such as Japan, have continued to see double-digit growth. Chinese visitor arrivals at its 20 most important destination countries that account for 50 per cent of overseas trips grew 6 per cent in the first quarter, according to data from consultancy Gavekal Dragonomics, but that was down from 23 per cent growth last year.

“Overseas travel is being hit with a double whammy of a weakening currency and rising political tensions,” Ernan Cui, an analyst at Gavekal Dragonomics wrote in a note. If the trade war worsens, “more downward pressure on the renminbi would translate into more downward pressure on Chinese outbound tourism”, she added.



Via Financial Times