The real estate industry is at the heart of China’s struggling economy. New data on Friday underscores problems in another sector that employs millions: tourism.
Domestic tourist travel to China, home to one of the world’s largest travel and tourism industries, fell more than 22% in the first half due to fallout from the country’s “zero-Covid” policies.
The number of trips fell to 1.45 billion in the first half of 2022 from 1.87 billion a year earlier, according to figures from the country’s Xinhua news agency, citing data from the Ministry of Culture and Tourism.
Draconian “zero-Covid” lockdowns left tens of millions of people stuck in a home for weeks across the country in the second quarter in major cities like Shanghai and Beijing. The House of the European Union said last month that the unpredictability of China’s response to the pandemic was “toxic” to its business environment. China says its approach is helping to save lives.
The decline in tourist numbers is partly explained by the lackluster performance of an economy that has been one of the leaders in global growth over the past few decades. Second-quarter GDP growth of just 0.4%, reported on Friday, was below the government’s target of 5.5% expansion for this year. Spending by domestic tourists fell to $173 billion in the first half of this year from $248 billion a year earlier, according to Xinhua figures.
Travel and tourism stand out for the jobs they create. In 2019, before the pandemic, about 28.25 million people were directly employed in China’s travel and tourism sector, according to Statista. Travel and tourism provided nearly 79.9 million jobs directly and indirectly, according to the report.
Hotel and travel stocks in China were hit. Among US stocks traded, H World, the major hotel chain chaired by Chinese billionaire Ji Qi, lost 22.6% last year and closed down 1.1% on Friday at $38.43. Trip.com, China’s largest online travel site, fell 0.5% and closed at $25.36 on Friday; it has lost 16% of its value over the past year during the global pandemic.
These stocks have rebounded from their 2022 lows, however, suggesting some investors believe the worst may be over. H World closed at $22.28 on March 14; Trip.com finished at $16.75 that day.
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