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Business Times
3 days ago
- Business
- Business Times
China's tourism industry could hit one trillion yuan by 2026: Citi
[SINGAPORE] China's tourism sector will gain a boost as the country seeks to diversify from manufacturing to other services, said Citi in a note on Thursday (Jun 5). This could transform the country's tourism sector into a one trillion yuan (S$178.9 billion) industry by 2026, said the bank's China economists Yu Xiangrong, Hu Yuanliu and Ji Xinyu. Policymakers have introduced substantive measures to support inbound tourism from abroad in an effort to soften the blow from US tariffs on goods exports, said Citi. This includes waiving unilateral visa requirements for 30 days of travel for an additional nine countries in South America and the Middle East in May, bringing the number of countries with unilateral visa-free entries to 47 countries. In December 2024, the country's transit policy had also been extended to allow visa-exempted travellers to make stops of up to 10 days (240 hours), a duration previously set at 72 or 144 hours, depending on the traveller's citizenship. This change also expanded permitted stay locations by an additional 60 ports and 24 provinces, the note found. Tax rebates have become easier to obtain for tourists, with the minimum purchase threshold reduced from 500 yuan to 200 yuan in April. Considerable effort has also been undertaken by payment companies along with the country's central bank to improve convenience and operability for foreign tourists, the note said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Such measures were notable in returning inbound tourism to pre-pandemic levels. The country's Ministry of Commerce reported that foreign tourists spent US$94.2 billion in 2024, an increase of 77.8 per cent from the year before. This accounted for about 0.5 per cent of gross domestic product. Currently, travellers to China comprise largely of residents from Hong Kong, Macau and Taiwan, making up about 80 per cent of the 131.9 million inbound travellers in 2024, said Citi. But momentum from beyond the region is building, with visits by foreigners increasing 40.2 per cent in the first quarter of 2025 from the previous corresponding period. 'The policy efforts are paying off,' the Citi team wrote, explaining that China's brand as a travel destination has become increasingly attractive. 'More international tourists are seeking to experience a 'real China'.' Lower-tier cities and local destinations have benefited from this trend, beyond popular travel destinations such as Beijing and Shanghai, the bank said. 'For example, Zhangjiajie has been popular for Korean tourists.' The deflationary environment in China, coupled with a weak renminbi, could further boost tourist spending, Citi wrote. If demand continues into the rest of 2025, the bank forecast a 40 per cent rise in foreign tourism and a 10 per cent rise in travellers from Hong Kong, Macau and Taiwan. Macroeconomic boost Revenue from inbound tourists in 2025 could grow to 880 billion yuan, in a 30 per cent increase from the previous year, Citi projected. This would add 0.15 percentage point to the country's GDP growth, the bank said. Local labour markets stand to gain from increased travel, with official reports estimating that 1.6 times more jobs are created from services compared to goods exports of the same value. Citi projected that the 30 per cent travel export growth would create about 500,000 non-farm jobs, bringing headline unemployment down by about 0.1 percentage point. Yet, a tourism boost may not be sufficient to relieve the country's deflation struggles. 'China's deflation is mostly industrial-driven with quite an entrenched demand-supply imbalance,' the report said. Travellers to China made up about 0.5 per cent of total retail sales in 2024, the bank said, which would not be enough of a demand boost to move the needle.
Business Times
3 days ago
- Business
- Business Times
China's tourism industry could surpass one trillion yuan by 2026: Citi
[SINGAPORE] China's tourism sector will gain a boost as the country seeks to diversify from manufacturing to other services, said Citi in a note on Thursday (Jun 5). This could transform the country's tourism sector into a one trillion yuan (S$178.9 billion) industry by 2026, said the bank's China economists Yu Xiangrong, Hu Yuanliu and Ji Xinyu. Policymakers have introduced substantive measures to support inbound tourism from abroad in an effort to soften the blow from US tariffs on goods exports, said Citi. This includes waiving unilateral visa requirements for 30 days of travel for an additional nine countries in South America and the Middle East in May, bringing the number of countries with unilateral visa-free entries to 47 countries. In December 2024, the country's transit policy had also been extended to allow visa-exempted travellers to make stops of up to 10 days (240 hours), a duration previously set at 72 or 144 hours, depending on the traveller's citizenship. This change also expanded permitted stay locations by an additional 60 ports and 24 provinces, the note found. Tax rebates have become easier to obtain for tourists, with the minimum purchase threshold reduced from 500 yuan to 200 yuan in April. Considerable effort has also been undertaken by payment companies along with the country's central bank to improve convenience and operability for foreign tourists, the note said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Such measures were notable in returning inbound tourism to pre-pandemic levels. The country's Ministry of Commerce reported that foreign tourists spent US$94.2 billion in 2024, an increase of 77.8 per cent from the year before. This accounted for about 0.5 per cent of gross domestic product. Currently, travellers to China comprise largely of residents from Hong Kong, Macau and Taiwan, making up about 80 per cent of the 131.9 million inbound travellers in 2024, said Citi. But momentum from beyond the region is building, with visits by foreigners increasing 40.2 per cent in the first quarter of 2025 from the previous corresponding period. 'The policy efforts are paying off,' the Citi team wrote, explaining that China's brand as a travel destination has become increasingly attractive. 'More international tourists seeking to experience a 'real China'.' Lower-tier cities and local destinations have benefited from this trend, beyond popular travel destinations such as Beijing and Shanghai, the bank said. 'For example, Zhangjiajie has been popular for Korean tourists.' The deflationary environment in China, coupled with a weak renminbi, could further boost tourist spending, Citi wrote. If demand continues into the rest of 2025, the bank forecasted a 40 per cent rise in foreign tourism and a 10 per cent rise in travellers from Hong Kong, Macau and Taiwan. Macroeconomic boost Revenue from inbound tourists in 2025 could grow to 880 billion yuan (S$157.4 billion), in a 30 per cent increase from the previous year, Citi projected. This would add 0.15 percentage point to the country's GDP growth, the bank said. Local labour markets stand to gain from increased travel, with official reports estimating that 1.6 times more jobs are created from services compared to goods exports of the same value. Citi projected that the 30 per cent travel export growth would create about 500,000 non-farm jobs, bringing headline unemployment down by about 0.1 percentage point. Yet, a tourism boost may not be sufficient to relieve the country's deflation struggles. 'China's deflation is mostly industrial-driven with quite an entrenched demand-supply imbalance,' the report said. Travellers to China made up about 0.5 per cent of total retail sales in 2024, the bank said, which would not be enough of a demand boost to move the needle.
Yahoo
25-03-2025
- Business
- Yahoo
Bond Market Sees Hint of Easing in China Monetary Policy Tweak
(Bloomberg) -- China's bond market is cheering a tweak by the central bank in the way it pumps cash into the financial system, on bets the surprise move may lead to lower funding costs and keep yields down. They Built a Secret Apartment in a Mall. Now the Mall Is Dying. Why Did the Government Declare War on My Adorable Tiny Truck? Chicago Transit Faces 'Doomsday Scenario,' Regional Agency Says LA Faces $1 Billion Budget Hole, Warns of Thousands of Layoffs Libraries Warn They Could Be 'Cut off at the Knees' by DOGE Government bond futures rallied across the curve on Tuesday, with the 10-year contracts jumping to the highest in more than two weeks. The move came amid speculation that lenders will be able to borrow one-year loans from the People's Bank of China at lower costs, thanks to a tweak in how policymakers will use a liquidity tool going forward. Late on Monday, the PBOC said it will allow qualified banks to pay different interest rates — rather than at a fixed cost — for loans it lends out via the medium-term lending facility. This means banks can now borrow at rates closer to those prevailing in the market, which have largely been lower than the official MLF rate in recent years, according to analysts and a report by PBOC-backed outlet Financial News. That's good news for government bonds, as Chinese commercial banks — the biggest investors in the debt market — will find it more profitable to use borrowed liquidity to buy fixed-income products. While implicit, the move also signals a greater willingness to ease monetary policy and contrasts with the PBOC's action in the last few months, when it defended the yuan by tightening liquidity and watching bonds slide. 'We see the potential minor rate cut as a signal of monetary stance turning from a hawkish bias year to date to accommodative as China's policymakers brace for external volatilities,' Citigroup Inc. economists including Yu Xiangrong wrote in a note Tuesday. They pointed to more US tariffs as a key risk for growth. China's 10-year bond futures rallied as much as 0.3% before paring gains, while contracts on 30-year debt climbed 0.6%. In the cash market, the yield on notes due in a decade rose one basis point to 1.82%. The market has been calling for an interest rate cut by the PBOC because the prevailing market funding cost has been lower than the MLF rate of 2% for a sustained period. The rate on one-year AAA-rated negotiable certificates of deposits, a measure of short-term borrowing costs between banks, stands at 1.9%. What Bloomberg Economics Says... 'The People's Bank of China's change to the auction rates for its medium-term lending facilities means that the interest rate on such loans will be more market-oriented. We have two conclusions: first, the central bank can now largely resolve the contradiction in its interest rate policy framework. Second, the move may push money market interest rates down in the short term.' — David Qu, China economist Click here for the full report. The PBOC has yet to announce the latest rates for the MLF as of Tuesday 4:45 p.m. China's top leaders in December endorsed a 'moderately loose' monetary policy for the first time since 2010, but the PBOC has yet to make broad easing moves. The Chinese central bank so far skipped a highly-anticipated cut to the reserve requirement ratio, which determines the amount of cash banks must keep in reserves. It has hinted at external constraints on loosening policy, as the dollar's strength only moderated recently and the Federal Reserve's rate cut path remains uncertain. Domestically, banks' narrowing net interest margins also limit the space for further rate reduction. Along with the change in the pricing method, the PBOC also announced a net injection of 63 billion yuan ($8.7 billion) via the MLF tool in March, the first net addition since July. 'The change in the MLF bidding method and a resume of net injection unleashed a easing signal,' Citic Securities analysts including Ming Ming wrote in a report Tuesday. --With assistance from Tian Chen. (Updates with more context.) The Richest Americans Kept the Economy Booming. What Happens When They Stop Spending? Google Is Searching for an Answer to ChatGPT A New 'China Shock' Is Destroying Jobs Around the World How TD Became America's Most Convenient Bank for Money Launderers Tesla's Gamble on MAGA Customers Won't Work ©2025 Bloomberg L.P. Sign in to access your portfolio
