China may be one of the world's fastest expanding tourist destinations, but quantifying the true size of the market is not an easy undertaking.
In tourism, as in the economy at large, China is bucking world trends and expanding fast. By exactly how much, however, is difficult to determine accurately. For a start, confusion arises from the frequent failure to distinguish between tourism and travel. Why is any given individual actually in China? Has he or she been categorised correctly? Then there is the question of definition, which is not always made explicit. Who, exactly, is being counted, and who is excluded? Anyone with an interest in the detail of tourism trends has a job on their hands making sense of the statistics.
Some apparent contradictions in headline data are easily settled. Figures ultimately derive from the China National Tourism Administration (CNTA). There will therefore be hidden consistency in published data. For example, whereas the CNTA gives the number of inbound arrivals in 2001 as 89m, the World Tourism Organisation (WTO) posts 33.2m for international tourist arrivals into China in its ranking of the world's top 15 tourist destinations. The contradiction is partly resolved by excluding same-day visitors from the CNTA figure. The loose exchange of the term 'travel' for 'tourism' is more problematic, however. It is common in the press and in statements by officials.
A question of definition
Arrivals and tourists are not equivalents, but this distinction is often lost. Breakdowns by purpose of visit are not reliable. For a start, a number of business and other travellers enter China on tourist visas. Tourist visas are more easily obtained than business visas, where applications require additional documentation, such as letters of invitation. A proportion of business travellers prefer to apply for tourist visas, taking the line of least bureaucratic resistance. Just how many is not known, but anecdotal evidence suggests that the numbers may be significant. Tourist data may also inflated by round-trippers who cross the border to Hong Kong, in particular, to renew expiring tourist visas. Again, a proportion of these may actually be working in China, albeit informally.
Then there is overlap, where individuals come to China for multiple reasons. Business often combines with tourism, or a family visit, and so on. Foreign students and the spouses and partners of corporate executives and diplomats may be working informally. This will not show up on their visas. Around 440,000 foreign experts come to China every year and there is a sizeable foreign student population, some of whom move directly to work for foreign-invested companies.
Elsewhere, there is relatively heavy day trader traffic across China's remoter borders, with Russia, Burma or Vietnam, for example. There are also significant numbers who cross the border simply to shop – for cheap commodities. These people will be lost to the statistics that cover overnight stays only. Moreover, their economic impact is of a very different order from those business travellers passing through the major ports of entry in places like Shanghai or Shenzhen, who stay in hotels, hire taxis, eat in expensive restaurants and generally spend more.
The CNTA's arrivals aggregate conceals the fact that the largest proportion of arrivals into mainland China come from Taiwan and the two special administrative regions (SARs), Hong Kong and Macau. The special relationship of these territories with mainland China makes for a different travel and tourism complexion compared with the rest of the world. Fewer than 7m of the 24m overnight visitors to mainland China for January- August 2002 were foreign nationals. More than 13m were from Hong Kong, and about 2m each came from Macau and Taiwan. Looking at two-way flows in and out of the mainland, out a total of around 108m passing through the 221 entry and exit ports in the first half of 2002, almost 78m hailed from Hong Kong and Macau. Only about 12m were classified as foreigners. An additional 3.5m were from Taiwan, with mainlanders making up the remainder.
An underdeveloped sector
All this suggests that truly international tourism in China is under-developed. Excluding the SARs and Taiwan, and allowing for uncertainty in the data, China might have only a fragile hold on its fifth place in the WTO ranking of world tourist destinations. Most foreign arrivals come from Japan (2.7m in January-November 2002), South Korea (2m), Russia (1.2m) and the US (1.1m). A high proportion of these visitors will be business travellers. China records that around 40 per cent of US arrivals in January- May 2002 went for tourism purposes, while 24 per cent were there for business reasons. About a quarter were an unspecified 'other' and 8 per cent were said to be visiting relatives. But again, some of the business travellers will have entered on tourist visas. What is more, the unspecified category may contain a significant non-tourist component.
Inside China, the imbalances can appear stark. Unsurprisingly, given the dominance of the SARs and Taiwan, Guangdong records an exceptionally high volume of visitors. Guangzhou alone claimed 64m domestic and foreign visitors in January-October 2002. Guangdong recorded almost 73m foreign visitors in 2001, or 81 per cent of China's total, and 39m in the first half of 2002. A proportion of the true tourist component will have ventured on to other destinations in China. So will some business arrivals. There will be a high volume of short-stay visitors, however, passing from Hong Kong to the manufacturing hubs in the Pearl River delta.
Statistics for domestic tourism are also slippery. The CNTA says there were 870m domestic tourists in 2002, with 220m of them travelling around the country. Home travellers do not need to record the purpose for their journeys. The split between tourists and those visiting family and friends around the time of the three major holidays (Chinese New Year, May Labour Day and October National Day) will be particularly blurred. Both segments are expanding as a result of rising incomes and increased leisure time.
The picture for outbound travel should be clearer. Although there is an increasing amount of individual, private travel, many mainland Chinese pass through travel agents on overseas tours. Many business travellers attend conferences and meetings as members of delegations, while overseas study has become increasingly popular for younger Chinese. There is also a rising number of expatriate Chinese who travel in and out of China on visits. In the first 11 months of 2002, 15m mainland residents exited the country. Many tourists and business people venture only so far as the SARs – 3m were recorded for Macau alone in 2002.
The volume of outbound tourists is set to boom. They may already account for the recent surge in overseas travel, which expanded by almost 34 per cent in the first half of 2002. High economic growth and rising real incomes are the main reasons. In addition, the authorities are expanding the number of countries with 'approved destination status' for group travellers, from around 20. For example, Germany was added in June 2002, effective from this month. It is estimated that this status will raise the number of Chinese visitors to Germany by 10 per cent or more, from an annual 200,000.
Clarifying the statistical data that is most readily available is crucial for forecasting the trends in travel and tourism in one of the world's fastest growing markets. In its report China, the Impact of Travel and Tourism on Jobs and the Economy, 2002, the World Travel and Tourism Council predicted that Chinese residents may be spending Yn1,294bn by 2010 on domestic and international travel, with business and government adding a further Ynb144bn. Analysts will need to understand traveller and tourist segmentation if they are to draw meaningful conclusions about China's potential. More transparency in official statistics and greater accuracy in their dissemination would help.