China’s travel economy is slowly coming back. Here’s where it stands

HONG KONG – Since China reopened its borders in 2023 after three years of Covid-19 isolation, domestic travel has thrived and high-speed rail has grown increasingly popular. But international trips in and out of the country are lagging behind, and flight capacity is still just two-thirds of pre-pandemic levels.

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

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

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

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

Travel to China ground nearly to a halt in the pandemic. It won’t fully recover until 2025.

Throughout the pandemic, China enforced some of the strictest travel rules in the world. Overseas travellers who managed to enter the country sometimes had to quarantine at their own expense for as long as two months.

As of December 2023, international flight capacity – essentially the number of available seats on flights coming from and going to China – was only 62 per cent of what it was in December 2019, according to OAG, a flight data analytics firm. But domestic travel has picked up: Over the three-day weekend at the end of last month, the number of those flyers exceeded pre-pandemic levels by nearly 10 per cent.

At the start of 2023, there were only about 500 international flights every week in China, according to the Civil Aviation Administration of China, the aviation regulator. Now there are about 4,600, and that number is expected to increase to 6,000 by the end of the year – about 80 per cent of pre-pandemic levels.

A big test will come in February 2024 around the Lunar New Year, known as the spring festival, 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 visits, China’s aviation regulator said last week.

China’s transport officials said they expected 480 million rail trips to be made during a 40-day travel surge around the spring festival in the weeks before and after the Lunar New Year, a nearly 40 per cent increase 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 holiday in October, a high, and the average daily number of passenger trips throughout the year exceeded 10 million.

Most analysts said they believed that the full recovery of international travel wouldn’t happen until 2025.

In a January research note, economists at Nomura, a Japanese bank, said the pace of the sector’s recovery would largely be determined by how much Chinese travellers were willing to spend. Pandemic-era problems like delays in issuing visas and passports that lasted through 2023 have been addressed.

“While supply-side constraints eased, the demand-side drag is now starting to kick in, and sizable headwinds remain for China’s outbound tourism recovery in 2024 and possibly 2025,” the Nomura economists wrote.

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