The changing face of China’s foreign tourists

BEIJING – Weaving through a horde of Chinese tourists clutching delicate blown-sugar figurines, tea and selfie sticks, Mr Joao Esteves, a Portuguese, stands out as a rare foreigner in one of Beijing’s oldest alleyways.

“I was just in Azerbaijan last week and seeing where I could go from there, and there was a good flight that was quite affordable. In Europe, we hear a lot about China, so I wanted to see the country for myself,” the 25-year-old software engineer said in Nanluoguxiang, Dongcheng district, on Nov 8.

What made China even more appealing to the solo traveller was that he did not need a visa for the trip. The

Chinese government has been rolling out visa exemptions

in earnest to dozens of countries over the past year. Portugal was granted the waiver in October.

Despite efforts to revitalise the country’s inbound tourism sector, international travellers are still not returning to China fast enough. It has been more than 18 months since the country reopened its borders, but international tourist numbers have not reached pre-pandemic levels.

Particularly noticeable is the slower return of American tourists, once a key market for the East Asian titan.

Analysts and tourism businesses told The Straits Times that cancellations by international airlines of flights and routes to China in recent months, coupled with geopolitical tensions, have dampened the sector’s recovery from the pandemic.

China recorded an estimated 95 million inbound tourist arrivals in the first nine months of 2024, according to the government. This is around 93.4 per cent of the number for the same period in 2019.

The Chinese government has pulled out all the stops to bolster inbound tourism by addressing pain points in recent months.

In March and April, the Chinese authorities made payments easier for foreigners by improving access to mobile payment platforms such as WeChat and Alipay. Major tourist attractions and hotels with three-star ratings or higher were instructed to accept overseas bank cards. In May, hotel operators were barred from turning away foreigners.

Visa exemptions have also been rapidly expanded to more than 50 nations. On Nov 8, visa-free entry for up to 15 days was extended to nine more countries, including South Korea, a key source of tourists.

These efforts have met some success. In the first half of 2024, 58 per cent of foreign visitors entered China under visa-free arrangements. Similar levels were logged in the third quarter.

Mr Edmund Ong, general manager of Trip.com in Singapore, said the online travel agency’s revenue from China inbound travel is now higher than what it was prior to the pandemic, accounting for more than a quarter of its revenue.

“Particularly, bookings from countries with visa-free entry to China are growing at the fastest rate,” he said.

Some observers said that China’s motivation for the slew of measures appears to extend beyond simply increasing inbound travel numbers.

They said the measures are aimed at boosting its public image and diplomacy, rather than borne out of necessity.

DBS Bank analysts Jason Sum and Geraldine Wong said that domestic tourism is far more significant to China’s economy. They noted that domestic tourist spending reached about US$616 billion (S$825 billion) in the first nine months of 2024. This amounted to about five times the total spending of international tourists at pre-pandemic levels in 2019, they said.

Nanyang Technological University’s Assistant Professor Dylan Loh said the efforts to simplify travel for foreigners are part of China’s move to foster greater exchange of people and ideas, and from the Chinese perspective, hopefully business as well.

These efforts signal that “China is still and will remain ‘open for business’ ”, said Prof Loh, who specialises in Chinese foreign policy. He added, however, that it is “still up in the air” if this message resonates with the global business community, particularly in the US and Europe.

In recent years,

foreign investment in China has slumped

amid trade disputes with the West.

Foreign companies pulled more money from the world’s second-largest economy in the third quarter of 2024, even as Beijing rolls out stimulus measures aimed at stabilising growth. China’s direct investment liabilities in its balance of payments, which measures foreign direct investment, dropped US$8.1 billion, according to data from the State Administration of Foreign Exchange released on Nov 8.

The geopolitical dynamics have changed the face of the tourism market. Tourists from the US, who are allowed to visit designated cities in China visa-free for six days, are returning at a slower pace, and businesses that serve such clients are feeling the pinch.

Busloads of Americans sampling China’s cuisine were once a common sight for Lost Plate Food Tours, which introduces foreigners to the country’s dizzying array of delicacies.

In the past, the firm would arrange culinary trips for these tourists in cities like Beijing, Xi’an and Chengdu, said Ms Evon Chua, general manager of the company’s China operations.

At the time, most of its customers were from Western countries. “Before Covid-19, we would get young people, families and coach groups. All have returned except the buses,” added the Singaporean, who has worked in China for nearly eight years.

Ms Kendra Tombolato, a director at tour operator WildChina, said the US market share of the firm’s business has shrunk from 70 per cent in 2019 to about 30 per cent now, offset by the growth of other markets like the Asia-Pacific.

Even after inbound travel resumed after China reopened in 2023, the return of tourists from the US is lagging behind other key countries feeding China’s international tourism sector.

Government figures show that in the first half of 2019, before the pandemic, the US and Malaysia tied for fifth place in terms of the number of inbound tourists handled by Chinese travel agencies. While Malaysia has kept its spot for the same period in 2024, the US did not.

As at September, monthly seating capacity for flights between America and China was still only 28 per cent of the level in 2019, reported The Economist.

NTU’s Prof Loh said a major deterrent for Americans dates back to 2023, when the US travel advisory on China was upgraded from “exercise increased caution” to “reconsider travel”, which remains until today.

“That cannot be conducive, obviously, for US tourists to enter China when your government is warning you that you may be at risk of wrongful detention,” he added.

At least 10 international airlines, including Qantas, Lufthansa and Air Asia Philippines, have in the past few months announced plans to cut back or cease flights to China, further throwing a spanner in the works.

These carriers, mostly Western ones, cited low travel demand, stiff price competition from local carriers and Russia’s closure of its airspace to many European airlines, raising operation costs.

Among these is Virgin Atlantic, which said that its sole route to China was stopped in late October due to commercial reasons, as flight times rose by up to two hours due to its inability to fly over Russia.

A Qantas spokesperson said demand had not recovered as anticipated after the airline resumed flights between Sydney and Shanghai in October 2023 following the pandemic.

Since July 28, the Australian airline has suspended the route due to low demand and redirected its aircraft to other destinations across Asia with strong demand.

However, other foreign carriers, including Korean Air and Air Canada, and several Chinese airlines are resuming or increasing their flights as restrictions ease.

Tourism businesses in China said they remain hopeful that the foreigner market will rebound, as they adapt their offerings to an emerging preference for intimate and immersive experiences that go off the beaten path.

A spokesman for Wendy Wu Tours, whose clients to China typically hail from Britain and Australia, said: “The post-pandemic traveller is more discerning, seeking customised, experience-rich journeys that connect deeply with Chinese culture, including culinary tours, historical sites and wellness experiences.”

Ms Tombolato of WildChina added: “We feel that, in general, travellers are looking for distinct experiences, those that will stay with them long beyond the moment they return home.”

Correction note: In an earlier version of the story, we said the firm was Lost Plate Flood Tours instead of Lost Plate Food Tours. This has been corrected. We are sorry for the error.