Millions of Chinese staying home shackle South-east Asian growth

Singapore – South-east Asian nations that were counting on Chinese travellers to drive tourism revenues and their economies post-Covid-19 are finding the flow of visitors far from the flood they were hoping for.

China’s slower-than-expected economic recovery

has left its population more hesitant to spend money heading abroad. The result: The number of Chinese arrivals in five South-east Asian countries varied between 14 per cent and 39 per cent in May compared with 2019 numbers, the latest official data compiled by Bloomberg News shows.

The visitor statistics suggest that the region’s economic recovery in 2023 will be muted, amid a dimming global growth outlook from tighter monetary policies and China’s faltering growth momentum.

Although Thailand, among the most tourism-reliant economies in the region, is benefiting from a rebound in post-pandemic travel demand,

Chinese visitor arrivals are expected to miss the original official seven million target for 2023

by at least two million.

Bali, one of the most popular holiday destinations and which accounts for the bulk of Indonesia’s total foreign visitors, saw demand for luxury hotels drop in the January-to-May period amid a substantial decline in tourists from China, according to securities firm Bahana Sekuritas.

Even Singapore, which had credited the travel boom for ruling out a recession in 2023, has seen disappointing numbers. Chinese visitors during January to May totalled 310,901 compared with 1.55 million in the same period in 2019, according to data from the city-state’s tourism board.

South-east Asia is not alone in hosting fewer Chinese visitors. Japan, too, is experiencing a lower turnout of Chinese travellers compared with pre-pandemic years. Still, the Asian nation is seeing a new group of shoppers that are replacing the once-dominant mainland spenders. 

Retail giant Takashimaya said recently that non-Chinese tourists accounted for almost 70 per cent of its total sales between March and May from tourists, compared with just 20 per cent during pre-pandemic days.

This trend is a cue for South-east Asian nations, including Malaysia, that went all out to woo Chinese travellers in 2023 to diversify their target markets and end their reliance on visitors from the world’s second-biggest economy.

Summer tour bookings by Chinese for South-east Asian destinations have not seen significant improvements from the first half of the year, said GZTC International Tour employee Qiu, who is based in Guangzhou and asked to use only one name, citing rules against speaking to the media.

Even the most popular destinations, such as Singapore and Malaysia, saw only about 30 per cent of the pre-pandemic demand during the summer holiday period, while others including Thailand were at 10 per cent, he said.

A slower increase in flight capacity has also been a drag on tourism recovery.

Flight capacity between China and the region is improving, but most routes are still well below pre-pandemic levels – with Singapore being the outlier, data from aviation analytics company Cirium shows.

A lack of tour groups also contributed to the slow pace of recovery, according to Bloomberg Intelligence. In the first quarter of 2023, only 1.6 per cent of Chinese travelling in tour groups went overseas, down from 30 per cent from the same period in 2019, data from the Ministry of Tourism and Culture showed. 

However, countries and industry observers are optimistic that Chinese tourists will hit the road in the latter half of the year. While current figures are modest, Singapore looks forward to the continued growth in Chinese visitor arrivals, a spokesman for its tourism board said.

“It is still early days yet since China’s reopening,” said Ms Selena Ling, OCBC Bank’s chief economist. “I’m hopeful that the Chinese visitor numbers will improve in the second half of 2023.”

BLOOMBERG