China has experienced a significant decline in foreign tourists, especially in major cities like Beijing and Shanghai. In the first half of the year, the number of foreign
visitors combined was less than 25% of the figures recorded before the pandemic in 2019.
Nationwide, the situation is alarming, as only 52,000 people arrived in mainland China on trips organised by travel agencies in the first quarter, compared to a staggering 3.7 million during the same period in 2019. Interestingly, almost half of the visitors were from Taiwan, Hong Kong, and Macau, while tourists from Europe, the Americas, Japan, and South Korea have shown a sharp decrease.
This scarcity of tourists has had a profound impact on China’s Foreign Direct Investment (FDI). In the first quarter, FDI inflows plummeted to $20 billion, significantly down from $100 billion in the same period the previous year, according to government data analysis. The situation is concerning enough to have triggered worries about deflation, given the stagnant economy, slow housing market, and record youth unemployment. China’s economy barely experienced any growth in the second quarter compared to the first three months of the year.
Furthermore, the American Chamber of Commerce in China’s survey indicates a notable shift in investment priorities, with China losing its position as a top-three investment destination for most American companies for the first time in approximately 25 years. Additionally, nearly half of the companies that had previously entered the Chinese market have no plans for new investments.
The decline in foreign tourists has dealt a major blow to China’s FDI and tourism sector, raising concerns about the country’s economic stability and future prospects.
Tensions with West Deter Foreign Tourists from Traveling to China The number of foreign arrivals in China remains low, partly due to limited flights as airlines have yet to fully restore their pre-coronavirus service levels.
However, travel experts from China and overseas point to another crucial factor – deteriorating relations between Beijing and the West. In June, the U.S. government issued a travel advisory urging Americans to reconsider travelling to mainland China, citing concerns about “arbitrary enforcement” by the Chinese authorities, including exit bans and the risk of arbitrary detention.
Furthermore, foreigners are increasingly troubled by China’s recently amended Antiespionage Law, which took effect on July 1. The law expands the scope of violations related to national security standards and grants the government broader authority to conduct searches, seize belongings, and impose personal entry and exit bans.
The cautious approach of foreign tourists towards travelling to China is attributed to limited flights and growing concerns about the strained relations between Beijing and Western nations, making the prospect of visiting the country less appealing.
Departure of Foreign Nationals from China Impacts Domestic Tourism and Expat Community
The decline in foreign tourists visiting China has directly impacted the income of local tourism operators. One such example is Snow Yu, a tour guide in Shanghai, whose business thrived in the past by catering to foreigners. However, during the pandemic, when China’s borders were mainly closed, he had to work temporarily as an English tutor, reported local media.
Apart from the decline in foreign tourists, China is also witnessing the departure of expatriates previously stationed there. These expats used to serve as a vital link between Chinese society and their home countries, often inviting family and friends to visit China.
Shanghai, being the headquarters of numerous foreign companies, has been a significant hub for expatriates. By 2022, it is estimated that a quarter of China’s expat population will reside in Shanghai. According to 2021 census data, approximately 164,000 foreigners work in various industries in Shanghai, including technology, finance, and education.
However, since late March 2022, Shanghai has experienced a strict two-month lockdown, leading to a significant outflow of the expatriate community from the city. The situation has further exacerbated the challenges faced by domestic tourism operators and impacted the once vibrant expat community that played a crucial role
in bridging cultural gaps between China and their home nations.