China’s visa restrictions hurting aim to boost tourism
For decades, China has sought to expand its “soft power”, or the ability to extend influence through non-military means. It spends some US$10 billion a year promoting language schools and building universities overseas. It’s pushing entertainment companies to expand in foreign markets. And it has long been hoping to lure foreign travellers, just as the US and Europe do.
But that effort is faltering: Inbound tourism last year rose by only 3.8 per cent, with roughly 80 per cent of those visitors coming from Hong Kong, Macau or Taiwan. One reason is that, for all its global aspirations, China isn’t at all welcoming to foreigners.
Its visa process offers a case in point. Citizens of only 13 countries are allowed visa-free entry to China (compared with 38 countries allowed by the US).
Everyone else must obtain a visa in advance. In the US, Chinese visa centres have the foot traffic associated with a Lunar New Year festival.
A visa costs US$140 ($186.55), but unless you’re prepared to wait on line for hours to hand-deliver your application, you should expect to pay another US$100 ($133.25) or more for a service to do so for you.
Such restrictions create significant economic barriers. One recent study found that a visa requirement for a given country will reduce inbound travel by 70 per cent. In 2015, mainland China received just 2 million visits from Americans. By comparison, Hong Kong — which makes up less than 3 per cent of China’s gross domestic product and less than 1 per cent of its population — received 1.8 million visits.
China has often worsened this problem by using tourism to further its political aims, notably in disputes with Taiwan and South Korea. It rarely seems to dawn on the government that foreign consumers can reciprocate. After China restricted travel to South Korea in a spat over a missiledefence system, South Koreans responded by staying away. In May, their arrivals to China were down 42 per cent over the previous year, while visits to Japan were up 85 per cent.
In the 2016 calendar year 25,280 New Zealand tourists visited China.
All this has implications for macroeconomic stability. According to a recent Federal Reserve Board working paper, as much as US$190b in outflows may have left China disguised as tourism-related consumption. By comparison, China receives about US$35b a year in foreign exchange from tourists. According to official balance-of-payment statistics, China ran a travel deficit of US$217b in 2016. That was equivalent to 44 per cent of its entire trade surplus in goods. For a country keen to prevent capital outflows, a lack of tourists is hitting right where it hurts.
But that’s only one symptom of a broader wariness of foreigners. In many parts of China, immigrants are almost unheard of. As recently as 2013 (the latest estimate available), less than 1 million foreigners lived in all of China — an amount exceeded by some individual American cities. Even Japan, which isn’t exactly a hub for immigration, has twice that amount. Multiple studies have shown that immigrants tend to boost economic growth, entrepreneurship and innovation, yet in China they’re all but unknown.
Solving these problems will be politically difficult. But one obvious step for China is to simplify its visa system. Other Asian countries, notably India and Vietnam, have lately made serious efforts to make their application processes simpler and cheaper. If China wants more foreign tourists — and their hard currency — it should make it easier for them to get there.