Asia’s Hungry Travel Sector Is Missing a Key Ingredient: China

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(Bloomberg) — Asian countries anticipating a sharp tourism rebound may find their long-awaited reopening won’t achieve the same boost without Chinese travelers.

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

Amid the ongoing virus outbreak across the mainland, China will likely stick to this Covid Zero strategy and keep a tight eye on its borders until at least the Winter Olympics in February 2022, according to Australia and New Zealand banking group economist, Crystal Tan.

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The world’s second-largest economy has doggedly pursued a zero-tolerance policy against the coronavirus, with increasingly harsh restrictions on movement shutting 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 more than a year.

ANZ’s Tan said a similar experience in Europe has led to a revival of tourism, but it may be difficult for Asia to replicate that success without high vaccination coverage, uniform health requirements and mutual reopening among neighbours.

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This has major implications for the region, which derives more than a tenth of its GDP from travel and tourism, particularly in countries such as Thailand, New Zealand, Malaysia and Japan, where the sector is a key pillar of growth.

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

“Visitors from mainland China are likely to remain absent as long as local quarantine requirements remain stringent,” said Frederic Neumann, co-head of Asian economic research at HSBC. “Another growth engine will gradually come back to life, but it won’t run on all cylinders.”

© 2021 Bloomberg LB

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