Economists have been predicting for years that China would surpass the US as the top global economic superpower, but the country has hit some recent bumps in the road, putting that ascension into doubt. Some of China’s problems include:
- Chinese stocks have fallen this year and investors are pulling billions out.
- The yuan has plunged 5% this year over economic concerns.
- China is now in a deflationary cycle.
- Youth unemployment has reached a record high of over 20%.
- China’s real-estate market is in shambles.
Things are so bad that some market experts are predicting the Chinese economy is heading toward a financial crash.
Now add another problem — China’s tourism industry is struggling to recover from the pandemic.
Several factors have played a role in the shortage of international tourists, including challenges associated with using cash or credit cards in China and the detainment of foreigners in perceived retaliation against rival countries. However, for Americans, one of the biggest deterrents is that flights are expensive and hard to find.
There are currently just 18 round-trip flights a week between the US and China, with the two countries recently agreeing to increase that to 24 in October. While that’s double the number from earlier this year, Time reports that there were 340 weekly flights between the countries before the pandemic.
On top of that, The Wall Street Journal reported that round-trip, economy-class tickets to China were going for about $4,500 this summer. Prices are up in part because US airlines stopped using Russian airspace following the invasion of Ukraine, which has increased flight times, and longer flights require more fuel.
The Wall Street Journal reported that just 52,000 people visited China from other countries with the help of a travel agency in the first quarter of this year. That was down from 3.7 million in the same period in 2019. WSJ spoke with one US agency that used to send as many as 1,500 tourists a year to China but has not had a single request since the start of the pandemic.
The China Tourism Association noted in May that “the number of visitors from Europe, America, Japan and Korea are all dropping, substantially,” The Japan Times reported.
This is in sharp contrast to travel to Europe, where the volume of foreign visitors is already back to 80% of its pre-pandemic levels.
Another factor playing a role in the lack of tourism could be fear. Not only are tensions high between the US and China, but the US government has warned Americans about the risk of traveling to there. In June, the US State Department wrote: “Reconsider travel to Mainland China due to the arbitrary enforcement of local laws, including in relation to exit bans, and the risk of wrongful detentions.”
In 2021, CNN spoke with more than a dozen academics, NGO workers, and media professionals who traveled to China regularly before the pandemic. They said they were no longer willing to go, citing personal safety and the detainment of several foreign nationals.
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The local boost in tourism will likely end
Earlier this year, the lack of foreign tourists was being offset by an increase in domestic tourism. Chinese travelers opted to stay closer to home, with Fan Lei, the chief financial officer of Tongcheng Travel, telling the South China Morning Post that people in China were buying fewer big-ticket items like real estate and cars and instead were spending more on experiences.
That was also the case in the US this past summer, where people spent more money on things like concerts and movies.
But China’s situation could take a turn for worse soon and some fear the country’s economy is heading for a “hard landing,” with a substantial downturn following strong growth. This will likely lead to people in China tightening their grip on the money they do have and spending less.
China’s problems could spill over into the global economy
Trouble for China’s economy could mean more bad news for the rest of the world. US Treasury Secretary Janet Yellen and President Joe Biden have warned of spillover risks for the global economy, with the latter calling it a “ticking time bomb.”
Several experts previously told Insider that a downturn in China’s economy could cause international trade to collapse, leading to too much inventory for companies, dwindling profits, and job losses for businesses in the US and other markets. They also noted there’s a risk of China exporting deflation, which could hurt corporate profits in the US.
Before the pandemic, 10.4% of global GDP — about $10 trillion — was tied to travel and tourism, and international visitors spent $1.9 trillion in 2019. Tourism hasn’t returned to those levels, but they’re on the rise, with travel-related GDP jumping 22% in 2022 to 7.6% and international spending up 81.9% in 2022.
People are visiting other countries again and spending money. They’re just not going to China — in the end, that could hurt us all.