China Tourism Affecting US Foreign Visitors Spend

Talking about the global tourism industry trends, some situations are bound to happen and some aren’t. But lately, things are looking difficult for the USA from an international tourism perspective. Chinese tourism contributing as FTAs (Foreign Tourist Arrivals) to the United States is stepping back drastically. As the Sino-American trade war deepens more and more, the US Foreign Visitors Spend by China has relatively reduced.

In the near past, there were always a few signs in the industry of international tourism. Signs which pointed in the direction of an escalation.

The Statue of Liberty.
The Statue of Liberty. Image Source.

And now with the latest World Travel and Tourism Council (WTTC) reports, things are getting worse in terms of numbers.

Also, recently the Chinese state media has asked for making tourism a “main parameter” to win the trade war. Hence, now there’s plenty of reason to be concerned for the US tourism stakeholders. All because of the China Tourism hitting the US Foreign Visitors Spend real bad.

Also read, What can be actually done about over tourism

Historic guide to the Sino-American Trade war

The US and China have been locked in an ongoing trade battle for a long time.

US President Donald Trump had expressed dissatisfaction regarding China’s trading practices since before he joined the office in 2016. There were investigations and imposed tariffs on billions of dollars worth of Chinese products last year, and Beijing retaliated in kind. After months of antagonisms, came a revolution in December.

Both countries agreed to halt new trade tariffs for 90 days to allow for talks. They have also imposed a deadline of early March 2019 to resolve their differences, or the battle might start once again.

What Kind of Tariffs?

As of now, the US has imposed around three rounds of tariffs on Chinese goods, totalling more than $250bn.

  • The duties range from 10% to 25% and cover a wide range of industrial and consumer items from handbags to railway equipment.

Mentioned below are US and China’s tariffs against each other:

US and China's tariff against each other.
US and China’s tariff against each other. Image Source: US census bureau, BBC research

Why tariffs?

Theoretically, tariffs, make US-made products cheaper than imported ones and encourage consumers to buy American rather than Chinese.

So this is a big game where the urge to run a business and soak up consumers on a global level is dominated by the trade rules, national policies and promotions.

Was the Exchange of threats the Cause?

The current slow down of FTA’s in the U.S from Chinese tourists might be a result of threats on tariffs. President Trump had threatened tariffs on another $267bn worth of goods. And this clearly meant all Chinese imports could be subject to tariffs.

The US has already put tariffs on worldwide imports of goods like steel and washing machines, which further affects the Chinese market and its products.

US drop in foreign tourists.
US drop in foreign tourists. Image Source.

Latest Update on American FTA’s

Research from the WTTC has reported that spending by international visitors dropped nearly 1 per cent every year by year (till date) to $198.8 billion.

This is an alarming number! Because the dollars coming from China FTAs makes up around 11 per cent of total spending mentioned.

The Effect of the trade relationship on the growth

There was a time when there was recorded 10 years of stellar growth in the US Foreign Visitors Spend. However, international visitor numbers from China were flat year on year, post the trade wars.

“This was caused in by the deteriorating trade relations between the two canny countries,” Gloria Guevara, the WTTC council’s president and CEO, said in the latest statement released.

Hence, understanding the economic importance of Chinese visitors, there is a need for softening the relationship. Because only that will have a positive effect on the US Tourism and economy.

In fact, there might also be reasons for concern for US lawmakers as well because according to the US Commerce Department:

  • The 2.97 million Chinese visits made to the United States in 2016 generated $33 billion in tourist spending.
  • Also, a full ban on Chinese tourism towards the United States would prove damaging to US tourism stakeholders.
  • And even a limited ban could prove a blow to tourism businesses and retailers (we can check the examples of South Korea and Taiwan).

The WTTC Summit

The WTTC Global Summit 2019.
The WTTC Global Summit 2019. Image Source

“Despite the spending drop from Chinese visitors, the US remains the world’s largest travel and tourism economy. “

As per the WTTC:

  • The tourism sector contributes nearly $1.6 trillion to the country’s gross domestic product or 7.8 per cent of the total.
  • They said the contribution grew 2.2 per cent year-over-year.
  • Globally, travel and tourism grew 3.9 per cent to contribute $8.8 trillion to the world economy, a separate WTTC report said. That’s higher than global gross domestic product growth of 3.2 per cent.

However, the data from the United Nations World Tourism Organization in January said global tourism arrivals grew 6 per cent in 2018, though North America saw international arrivals increase by only 4 per cent.

But in a recent report, Tourism Economics said international arrivals to the United States grew only 2 per cent last year. The WTTC supported Tourism Economics for its research.

The group council then together said:

  • 79.9 million international visitors came to the United States last year. Yet this number is expected to increase to 82.5 million this year.
  • Of the visitors in 2018, counting to 79.9 million, ONLY 3 per cent were Chinese, a spokeswoman said.

Official numbers on full-year arrivals and spending from the US Department of Commerce are not yet available. Their release was delayed due to government shutdown as per the sources.

Chinese travellers in USA.
Chinese travellers in the USA. Image Source

The Solution: Global tourism recommendations to the U.S

Mentioned below are some recommendations by the global tourism group for a pragmatic growth in US tourism:

  • Renewing the Brand USA
  • To get the country’s destination marketing organization authorized max by 2020.
  • Expanding and renaming the US Visa Waiver Program.
  • To upgrade airports and other infrastructures
  • To embrace biometric passenger identification

Even though the official government data is still unavailable for 2018, to predict 2019 statistics is going to be a challenging year for the US Tourism economy.

The reports clearly show the United States is losing ground when it comes to international tourism all because of the key Chinese markets.

Speaking about global tourism and its growth slowing down, it’s a challenge for every country. So now, do you think tourism advertising will be a good step to curtail the low numbers?

Do mention your perspective in the comments section below!


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