In charts: China’s outbound tourism in 2024

How has tourism performance been of late?

  • The recovery for Chinese tourism has been uneven, with a swift and sound rebound in domestic tourism, and tepid and partial growth for outbound tourism in 2023. Domestic tourism volume will exceed the pre‑pandemic levels in 2024. According to the latest data from the National Bureau of Statistics, about 489m domestic trips were made in 2023, generating Rmb4.9trn (US$679bn) in tourism revenue. Spending per domestic tourist in 2023 has already surpassed its pre‑pandemic levels, reaching a five‑year high. This strong rebound in domestic tourism mirrors the continuing recovery of service consumption in China, owing to a shifted consumption preference towards experiential spending. 
  • Meanwhile the rebound in services consumption has not had enough of a positive impact on outbound tourism. We do not expect outbound tourism to return to pre‑pandemic levels until 2025. Notwithstanding the rise in domestic tourism, Chinese households made 101m cross-border trips in 2023, equivalent to 60% of its 2019 levels. Of those, more than 70% of the trips were to Hong Kong, Macau and Taiwan, suggesting that the number of trips elsewhere in 2023 reached 2.4m, only recovering to 36.3% of its 2019 levels. In contrast, countries that reopened their borders earlier, such as South Korea, Australia and Singapore, saw their respective outbound tourism levels recovering to more than 65% of their pre‑pandemic levels one year after reopening, even with covid-related restrictions in other countries.  

What are the obstacles to outbound tourism recovery?

  • The tepid outbound travel market is largely down to two reasons. First, the Chinese household balance sheet was hurt severely by the country’s stringent covid restrictions and the lack of household-focused subsidies during the pandemic. This has suppressed the demand for costly outbound tourism among Chinese households, who have become more sensitive to prices. Depreciation of China’s currency, the renminbi, high inflation in destination countries, and an insufficient supply of flights and tourism services have raised the cost of post‑covid outbound travel. Meanwhile the recovery in China’s outbound tourism is also undermined by the rapid development in domestic tourism services, which, in many ways, is less costly and seen by Chinese households as offering better value for money.
  • The second reason is policy-wise limitations—the most prominent of which is the increasingly complicated visa application process, which has been exacerbated by increasing geopolitical tensions. For Chinese travellers, a more difficult travel-visa application process could mean that there is greater uncertainty in travel planning, which could lead to a loss of money and time. A simplified visa process, or even a visa waiver, will help to boost Chinese visitor arrivals. A compelling example is Singapore’s Chinese tourist numbers, which increased by 45% in February from a month earlier (and 388% from a year earlier) after a visa waiver for Chinese travellers during the Chinese New Year holiday. We expect countries that have visa-free entry for Chinese tourists, including Thailand, Singapore, Malaysia and the UAE, to continue to see rising Chinese arrivals in 2024.
  • Moreover, inertia in China’s domestic policy is a problem. The policy of limiting “unnecessary” outbound travel remains intact in the civil systems and state-owned enterprises—the employees of which, we estimate, account for about 17% of total urban employment in China. This will disproportionately benefit Hong Kong- or Macau-bound travelling, which are in some cases exempted from this policy. The fact that public employees still need approval for travelling abroad even after the zero-covid policy was scrapped will inevitably hamstring China’s outbound tourism recovery, as most of these employees fall into the middle- or upper-middle income groups that are the supposed drivers of outbound tourism. 

The future of Chinese outbound tourism and changing travel preferences

  • We expect China’s outbound tourism to continue to regain lost ground in 2024, and that the recovery of outbound tourism outside of Greater China will accelerate this year. However, we maintain that the overall number of Chinese outbound travellers will remain short of pre‑pandemic levels until 2025. In terms of travel expenditure, we believe that nominal tourism expenditure will recover more quickly than tourist volumes. This is supported by the fact that prices are higher relative to the pre‑pandemic level in most destinations, and the early movers in overseas travel tend to be in a higher-income group that are less sensitive to prices. 
  • The ease of inflation in major tourism destinations, as well as stabilisation of the renminbi exchange rate, will help to underpin demand for outbound tourism in 2024. Domestically, the continuing improvement of the labour market is likely to restore household income expectations and consumer confidence, which in turn will result in greater willingness to spend on costly overseas travel. However, some structural problems in the labour market, namely youth unemployment, will remain. This will continue to pose challenges to China’s outbound tourism, as the youth make up a significant portion of outbound travellers.   
  • We expect that flight capacity will be increasingly close to pre‑pandemic levels, further supporting the outbound tourism demand. Earlier this year, Chinese officials set a target of weekly flight capacity to achieve 80% of its pre‑pandemic levels by the end of 2024. We believe that a large portion of normalised flight routes from China will mostly concentrate in the Asia Pacific and the Middle East, while routes to the Americas will not recover as quickly. The visa‑free agreement will help to extend flight capacity, which is likely to benefit bilateral tourism volume. 
  • Despite these near-term obstacles, we believe that China’s outbound tourism is still on a growth track in the long run. China’s economy is becoming more consumption-driven; as household incomes rise and people are willing to spend more, we believe that the share of tourism in total household expenditure will further increase, thus benefiting the growth in outbound tourism. However, the pace of growth in outbound tourism will be slower than that in the 2010s. A low share of valid passport holders also suggests a largely untapped consumer base. Currently, about 14% (data from 2019, although this could be less after the pandemic) of Chinese adults own a valid passport, compared with 56% in the US and 84% in the UK. 
  • Although the number of outbound travellers will continue to rise, the preference of Chinese tourists will gradually shift away from shopping overseas to consumption of cultural and experiential products. This change has already taken shape; the share of shopping in Chinese tourists’ total spending in Japan dropped from 51.1% in 2019 to 37.3% in 2023. In contrast, their spending on accommodation and entertainment surged (see chart below). In this regard, sports and musical events that drive overseas travel could be more popular among Chinese tourists. 

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