THE GROWING TOURISM INDUSTRY IN CHINA

Travel and tourism has become a strategic industry in China’s development toward a socialist market economy. Two decades of development have yielded both positive experiences and hard lessons. The country is still probing better ways of developing a strong travel and tourism industry that can compete successfully in regional and global markets. China faces many opportunities and challenges in developing its tourism in this new century, although they may be quite different from those in the decade before. China’s tourism has a bright future, although arduous efforts will be required to develop it effectively.

CHINA’S TOURISM ENVIRONMENT
China is rich in tourism resources. An incredible diversity of landscapes and cultures stretches across the vastness of the country. Every type of tourist will find something: densely crowded cities with modern skylines and old traditional structures, UNESCO-recognised natural and cultural heritage sites, agricultural villages nestled in lush tropical vegetation, nomadic horse riders galloping across open grasslands and deserts, snow- and ice-covered mountains offering challenging adventures for new tourists, and quality resorts with world class golf and other entertainment activities. Most of the many cultures are old and very traditional. There is great potential in China for specialised tourism, focusing on ethnic groups and colorful cultures, as well as environmental adventure. The growing market in ecotourism in the developed world will find considerable opportunities in China, as well.

Sound economic growth supports the tourism industry. Further deepening of the recent economic reforms and increasing openness to the outside world have helped China’s economy grow quickly. The country’s gross domestic product (GDP) was RMB 8940.4 billion (bn) yuan in 2000 (US$1.00 = RMB 8.30 yuan), and China experienced an annual growth of 8.3 percent in the latter half of the 1990s. It is expected to grow at 7 percent per year in the first five years of the new century. The stronger economy will afford further improvement in infrastructure for tourism development and, at the same time, will foster more Chinese tourists, both domestic and outbound.

Positive government policies advance tourism. The Chinese government first made clear that tourism was an important part of the tertiary (service) industry in the 1980s. Tourism was further designated as a growth point of the national economy in the late 1990s. So far, over two-thirds of the provincial governments have committed to making tourism one of their pillar industries. In the national campaign for the development of western China, tourism has also been
made a priority among industrial sectors. In his report on the “10th Five-Year Plan for the National Economy and Social Development,” Premier Zhu Rongji stressed that the development of the service sector should be sped up, and more efforts should be given to the service industries directly related to resident consumption such as real estate, community service, travel and tourism, catering, entertainment and recreation, and health.

Therefore, more preferential government policies have been, or will be, worked out to support tourism development at both central and local levels. For example, the central government has increased public holidays, and purposely made three week long holidays per year (one each during the Spring Festival, May Day Festival, and the National Day holiday, which starts October 1) to give residents more leisure time. Indeed, this practice has proved that domestic tourism can be a driving force for increasing domestic consumption, and further stimulating production.

INTERNATIONAL TOURISM ENVIRONMENT
China’s entry into the World Trade Organisation will expand tourism. China joined the World Trade Organization in November 2001.
This may provide other opportunities for its tourism development, including:
• fewer formalities and barriers for cross-border travelers,
• reductions in traveling costs as a result of global competition,
• removal of some protectionist policies, and
• upgrade of communication, financial, and information facilities.
China will remain more open to the outside world, and more international management practices will be introduced. The removal of barriers to trade and travel will enhance China’s position as a country for financial investment, international business, and business and leisure travel.
The international climate is improving for China’s tourism development. China is located in the rapidly growing Asia Pacific realm. Both economies and tourist travel are expected to grow faster in this region than in the rest of the world, although the unexpected financial crisis cast some shadows on the region’s economy in the late 1990s.
According to the WTO, the worldwide average growth of international tourism during the 1990s was less than 5 percent, while growth in the Asia Pacific region was over 8.3 percent in the first half of the decade, and 2.7 percent in the latter half due to the financial crisis (WTO 2000).
China is the largest country in the Asia Pacific region and an active member of the Pacific Asia Travel Association (PATA). In terms of international tourism, China enjoyed the fastest growth in arrivals in the region in the last decade, and such trends will develop in the years to come. In addition to Japan, which is expected to continue to be a major tourist market for China, other countries in the region, and the close neighboring countries in particular, are expected to bring even more

leisure tourists and business travelers to China. According to the WTO, China’s top ten markets will include Japan, the Republic of Korea,
United States, the Russian Federation, Mongolia, Singapore, Malaysia, the Philippines, the United Kingdom, and Germany by 2020, and China’s annual growth rate from 2000 to 2010 will be 9.5 percent (WTO 2000). The return of Hong Kong and Macao to their motherland has been a success, making movements of people easier and more frequent. As a unique and interesting destination, China will be a major factor in the future development of regional tourism throughout Asia, as well as throughout the world. According to the forecast by WTO, China will be the top international destination country in the world with about 137 million international arrivals by the year 2020, and with over 1 million outbound visitors a year, China will rank fourth on the list of countries generating tourism (Tables 1.1 to 1.4).

TABLE 1.1. World’s Top Ten International Tourism Destinations (2000)

Rank	Country	Int’l Tourist Arrivals (millions)	Growth (%)
1	France	74.5	2.0
2	United States	52.7	8.7
3	Spain	48.5	3.7
4	Italy	41.2	12.8
5	China	31.2	15.5
6	United Kingdom	24.9	–15.5
7	Russian Fed.	22.8	23.2
8	Canada	20.4	4.9
9	Mexico	20.0	5.0
10	Germany	18.9	10.5

Source: World Tourism Organisation (WTO) (2001). Tourism Highlights 2001. Madrid: WTO

TABLE 1.2. World’s Top Ten International Tourism Earners (1999

Rank	Country	Int’l Tourism Receipt (US$ million)	Annual Growth (%)
1	United States	74, 881	5.0
2	Spain	32, 497	8.9
3	France	31, 507	5.3
4	Italy	28, 359	–5.0
5	United Kingdom	20, 223	–3.6
6	Germany	16, 730	–0.2
7	China	14, 098	11.9
8	Austria	12, 533	–0.8
9	Canada	10, 171	8.2
10	Mexico	7, 223	–3.6

Source: World Tourism Organisation (WTO) (2001). Tourism Highlights 2001. Madrid: WTO.

TABLE 1.3. Top Ten World Tourism Destinations in 2020

Rank	Country/Region	Int’l Tourist Arrivals (thousands)	Market Share (%)	1995-2020 Growth (%)
1	China	137,100	8.6	8.0
2	United States	102,400	6.4	3.5
3	France	93,300	5.8	1.8
4	Spain	71,000	4.4	2.4
5	Hong Kong, SAR, China	59,300	3.7	7.3
6	Italy	52,900	3.3	2.2
7	United Kingdom	52,800	3.3	3.0
8	Mexico	48,900	3.1	3.6
9	Commonwealth of Independent States	47,100	2.9	6.7
10	Czech Republic	44,000	2.7	4.0
TOTAL		708,800	44.2

Source: World Tourism Organisation (WTO) (1997). Tourism: 2020 Vision. Madrid: WTO.

TABLE 1.4. Top Ten World Tourist-Generating Countries in 2020

Rank	Country/Region	Outbound Tourist Departures (thousands)	Market Share (%)
1	Germany	163,500	10.2
2	Japan	141,500	8.8
3	United States	123,300	7.7
4	China	100,000	6.2
5	United Kingdom	96,100	6.0
6	France	37,600	2.3
7	Holland	35,400	2.2
8	Canada	31,300	2.0
9	Commonwealth of Independent States	30,500	1.9
10	Italy	29,700	1.9
TOTAL		788,900	49.2

Source: World Tourism Organisation (WTO) (1997). Tourism: 2020 Vision. Madrid: WTO

The success of China’s market-oriented reforms has drawn attention worldwide, from politicians to business circles and the general public. China’s rapidly developing business environment is already responsible for a major part of the growth in tourism in recent years.
Not only are foreign investments flowing into the country, but they also are increasing the numbers of entrepreneurs, who typically combine pleasure with their business trips. This component of the visitor market will likely increase in the coming years. There is little doubt that, barring any unpredictable upheavals, China will soon be as successful in the tourism business as any competitor in the international marketplace. Based on the WTO’s bright forecasts, and adjusted for the specific goals and conditions, the China National Tourism Administration (CNTA) developed the “10th Five-Year Plan and Long Term Goal Outlines up to 2015 and 2020 for Tourism Development in China” (CNTA 2001). Over the next twenty years, according to this ambitious plan, China will move from being a big tourism country to becoming a powerful tourism country. Specific quantitative goals set in the plan include the following:
• By 2020, China will have 210 to 300 million inbound tourist arrivals, 2.5 to 3.6 times greater than the figure of 2000. Among them, foreign tourist arrivals will reach 31 to 45 million, 3 to 4.4 times greater than that of 2000.
• International tourism earnings will be US$58 to 82 billion, 3.6 to 5 times above the figure of 2000.
• During the same period, domestic tourism revenue will reach RMB 2100 billion yuan, 6.6 to 9.4 times that in 2000.
• Therefore, the total output of both inbound and domestic tourism will be RMB 3600 billion yuan, 8 times of that of 2000, equivalent to 11 percent of China’s GDP by 2020. Indeed, the tourism industry will become the pillar of the country’s economy.

For the first five years in the new century, the foundation stage, international tourism revenue will grow by 8 to 10 percent annually, while domestic tourism revenue will grow by 8 to 9 percent. The second five years will be an upgrading stage, with international tourism revenue growing by 6 to 8 percent, and domestic tourism revenue growing by 10 to 12 percent. The third five years, from 2011 to 2015, will be a stage of consolidation. International tourism revenue will reach US$43 to 56 bn with an annual growth of 6 to 8 percent, while domestic tourism revenue will grow by 10 to 12 percent. The last five years of the plan, from 2016 to 2020, will be the stage of perfection.
By 2020, the total tourism output will be RMB 2500 to 3600 bn yuan, accounting for 7.9 to 11.4 percent of China’s GDP. The plan has been approved, and detailed implementation measures have been developed by the CNTA.