Asia’s hungry travel sector is missing a key ingredient: China

Published 16 Nov,2021 via Bloomberg News Service (Global Editions) - Asian countries anticipating a sharp tourism rebound may find that their much-awaited reopening won’t have the same boost without Chinese travelers.

China, the region’s largest source of foreign tourists pre-pandemic, requires returning residents to undergo mandatory quarantine of as long as three weeks. Alongside that and other travel hurdles, including piles of paperwork, testing and insurance requirements, any trip abroad in the new normal remains “an unattractive proposition,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp.

Amid persistent virus outbreaks across the mainland, China will likely stick with this Covid Zero strategy and patrol its borders tightly until at least the Winter Olympics in February 2022, according to Australia & New Zealand Banking Group economist Krystal Tan.

The world’s second-largest economy has doggedly pursued a zero-tolerance policy to the coronavirus, with increasingly harsh movement curbs that have locked down schools and amusement parks at the slightest threat of infection. Meanwhile, a steady decline in Covid-19 cases in Asia has allowed countries to welcome foreign travelers back to the beaches of Bali, Phuket and Langkawi after over a year.

A similar experiment in Europe has led to a tourism revival, but it may be difficult for Asia to replicate that success without high vaccination coverage, standardized health requirements and reciprocal reopening between neighbors, ANZ’s Tan said.

That has heavy repercussions for the region, which derives over a 10th of its gross domestic product from travel and tourism, especially for the likes of Thailand, New Zealand, Malaysia and Japan, where the sector is a major pillar of growth.

China accounted for nearly 40% of the 240 million tourist arrivals across Asia in 2019, according to HSBC Holdings Plc data. Stripping out the impact of Chinese visitors, Asia’s net tourism receipts would have been lower by 1 percentage point on average.

“Visitors from mainland China will likely remain absent as long as domestic quarantine requirements stay this strict,” said Frederic Neumann, co-head of HSBC’s Asian economic research. “Another growth engine will gradually spring back to life, but it won’t fire on all cylinders.”

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