China’s tourists are also dou­bling up as in­vestors

The Star Early Edition - - OPINION&ANALYSIS -

TALES of Chi­nese tourist largesse pro­vid­ing a big boost to des­ti­na­tion economies are leg­end. They may also be in­cor­rect, with China’s cur­rent ac­count sur­pluses un­der­stated as a re­sult.

Anna Wong, a se­nior econ­o­mist with the US Fed­eral Re­serve, reck­ons the money spent over­seas by Chi­nese tourists – about $215 bil­lion (R2.77 tril­lion) last year – is not all it is cracked up to be.

In a draft pa­per for the Fed’s gov­er­nors, Wong says a large amount of the money des­ig­nated as hav­ing come from Chi­nese tourists glob­ally should ac­tu­ally count as in­vest­ment in as­sets. “Fi­nan­cial out­flows con­cealed as travel im­ports are large and sig­nif­i­cant, grow­ing to around 1 per­cent of China’s gross do­mes­tic prod­uct in 2015 and 2016, and ac­count for a quar­ter of recorded net pri­vate fi­nan­cial out­flows,” she wrote.

This would mean that China’s cur­rent ac­count sur­pluses over the past few years are ac­tu­ally larger than re­ported, and pos­si­bly as big as be­fore the fi­nan­cial cri­sis.

China’s cap­i­tal con­trols make it dif­fi­cult for wealth­ier Chi­nese to in­vest abroad. But the im­pli­ca­tion of Wong’s find­ings is that there are a plethora of ways for the coun­try’s “tourists” to buy property and other as­sets over­seas.

One ex­am­ple is that China’s travel ex­pen­di­ture as a share of gross do­mes­tic prod­uct was re­ported to be higher than Bri­tain’s in 2014. – Reuters

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.