Tourism sector in China & the effects of “Zero COVID” Restrictions
This article was originally published in Italian in Panorama on 20th Sep 2022.
Please note that this is a courtesy translation of the Italian language article originally published in the Panorama Magazine Issue at:https://www.panorama.it/news/dal-mondo/turismo-cina-restrizioni-zero-covid
China's fight against the Omicron variant is still ongoing, imposing multiple lockdowns and tightening the restrictions aimed at containing this highly transmissible virus.
But what has been the main impact for what was, at least until recently, a prosperous industrial pole worldwide, now under the influence of a government that continues to adhere firmly to the zero-COVID policy? And what have been the effects of these measures, which have now lasted for about three years, on the internal economic situation of China and internationally?
Chinese tourism has slumped since the pandemic hit in early 2020. Domestic tourism revenue for all of last year was about half of what it was in 2019, according to the China’s Tourism Ministry. This year, figures for the first six months showed a drop of about 28% from the same period in 2021. And since Shanghai's two-month lockdown ended in June, China has battled outbreaks of varied severity across the country, including in the resort island of Hainan and southwestern metropolis of Chengdu.
In the last few weeks, data comprised from the number of trips taken over China's recent three-day Mid-Autumn Festival holiday (one of the major bank holidays in China) drastically shrank, with tourism revenue also falling, as strict COVID-19 rules discouraged people from travelling. The number of trips made by tourists fell 16.7% from a year earlier to 73.4 million trips during the holiday, according to the Ministry of Culture and Tourism, with tourism earnings slumped 22.8% to 28.68 billion yuan ($4.15 billion Euro).
Even for those who did venture to travel during the holiday, official announcements issued by China's National Health Commission emphasized that when moving between provinces, travelers need to show negative virus tests taken within the last 48 hours — as has been the general practice for travel between certain areas across the country. The health authority said this policy would last until October 31st, with subsequent adjustments to be announced as needed.
It should be noted that even with these restrictions put in place, the aforementioned Commission ultimately encouraged people to stay put during the holidays and avoid holding large group events therefore inadvertently placing a block on travel even domestically
China & International Travel
Despite adding more international flights at the beginning of summer 2022 amidst reducing quarantine time for overseas arrivals (arrivals will have to spend seven days at a government-run quarantine facility, followed by another three days in home isolation) China remains almost completely isolated from the rest of the world as it adheres to its strict Zero COVID policy, with flights in and out of Asia’s biggest economy even fewer than when the first cases of the virus were discovered in Wuhan in early 2020.
As air travel elsewhere springs back, data from flight information providers shows little improvement in China’s international air travel options, with around 100 flights per day compared to more than 2,600 before 2020. Daily flights in China on April 4th of this year plummeted down to a measly 1670 flights per day, a number equivalent to the situation in the country 20 years ago, when China had only 600 aircrafts as well as recording passenger loads down to 48%.
According to data compiled by the Aviation and Aerospace Working Group of the European Chamber of Commerce in China, in 2022, the US domestic and the European internal passenger market have already largely recovered, with ticket sales for January to May 2022 in the US ranging between 20% to 10% below 2019 levels. Within Europe, the corresponding range is down 55% to 37%, improving progressively over the aforementioned months. In China, however, ticket sales have been dropping progressively between February and May, being a dismal 94% below 2019 levels in the month of May, with international ticket sales 97% below 2019 levels in each month between Jan 2022 and May 2022.
Many of the expatriate business community have had to resort to private plane charters, with the Italian Chamber of Commerce in China as well as the American Chamber of Commerce in Shanghai offering the opportunity to sign up for charter flight tickets from Milan to Nanjing as well as Los Angeles to Hangzhou respectively.
China’s border rules have become so intensive that the US has begun suspending 26 flights by Chinese airlines in September, specifically protesting the unreasonable policies should passengers test positive for COVID (According to Civil Aviation Authority of China rules, if at least 4% of passengers on a flight test positive for COVID after arrival, one flight by that airline will be suspended for one flight. If the number reaches 8%, two flights will be suspended for two flights.)
Even for expatriates living and working in China, the options for traveling back between their home country or even their company headquarters are extremely limited and rife with bureaucratic pitfalls and high costs, leading to personal issues on the individual level and lack of effective communication on the corporate level.
International Tourism Projects
A launch ceremony for 2022 China Tourism and Culture Week was held on Sept 6th in Beijing, officially starting a global event which runs until the end of this month, which will host a series of online and offline art exhibits, video shows, lectures, and forums, in order to better acquaint people with Chinese culture and tourism.
The aim of staging such a global project is “to promote international exchange and cooperation between China and the rest of the world”, said Hu Heping, culture and tourism minister, in a keynote speech at the launch ceremony.
Such innovative means of promoting China globally are admirable considering the unique travel restrictions placed upon the country, however, there is no real substitute for visiting a country and experiencing its culture first hand, digitalization of the tourist industry, at present, cannot be fully replicated and make up for loss of revenue from international travelers.
On the other side of the fence, 2022 also represents the Italy-China Year of Culture and Tourism (a concept originally conceived in 2020 to celebrate the fifty years of relations between the Italian Republic and the People’s Republic of China.) The Italy-China Year of Culture and Tourism 2022 presents a variety of shows and events, both in China and in Italy, emphasizing the link between the promotion of the cultural and tourism offerings of Italy.
As in 2019 Italy became, for the first time, the most visited European country by Chinese tourists, despite the fact that tourist flows have been temporarily interrupted, the Italian National Agency of Tourism, in coordination with the Italian Embassy in Beijing and with the consular offices, have continued activities via communication channels on a variety of digital platforms. Now, with the Italy-China Year of Culture and Tourism this year, the aim is to further ensure the growth of Sino-Italian relations between businesses, schools, universities and, more in general, between the two populations.
It is evident from two coinciding tourism promotional projects that when the correct conditions are put in place, the promotion of tourism between the EU and China can thrive and reach new heights, however, it is unlikely that the same can be said when the promotion of the rich culture and landscape of China and Italy can only be conveyed through events and via digital platforms, instead of lucky travelers being able to venture to the country for themselves.
Whether it’s domestic, international, business or leisure, there’s no hiding from the fact that China’s tourism industry is hurting, compiled on to the list of the other associated issues with the “Zero COVID” policy
As in recent months, China has been plagued by a number of mounting issues, most notably slower economic growth, with the GDP growth for the first half of 2022 dropping to 2.5%, lower than the annual target of 5.5% as well as internationally, with the tension between China and the US intensified since China staged a series of military exercises around Taiwan following US House Speaker Nancy Pelosi's visit to Taiwan last month, heatwaves among the most severe ever recorded as well as power cuts disrupting operations.
All in all, a relaxation of COVID-19 travel restrictions may be the help ease the heavy burden on the tourism industry both domestically and internationally and help attract more tourists. A number of options remain available as per international experience, the adoption of the “Singapore model” for example, whereas those showing signs of infection or with mild or asymptomatic symptoms should remain at home, a move towards a “living with COVID-19” strategy, focusing on tracking and treating outbreak clusters with vaccinations and hospital admissions – but without the strict lockdowns, border closures, and work-from-home orders that have been the defining feature of much of the pandemic across the world. The expediency of introducing further booster vaccines as well as the introduction of a mixture of vaccines, allowing for European and American vaccines to be able to enter the China market and provide further protection. Finally, the current mandatory quarantine period, which based on the recent practice of Hong Kong (recently cut from 7 days to 3 nights of compulsory quarantine) should be lowered in order to allow for the steady and reasonable opening up of regular international travel for China sooner, rather than later, as it remains one of the few places in the world to require a quarantine to guard against travelers spreading COVID-19.