China is a critical market for global travel. In 2019, outbound Chinese travellers spent more than USD133 billion, the second highest amount globally. A major obstacle to the global travel industry’s recovery from the pandemic has finally been removed. On 8 January 2023, China eliminated most travel restrictions following the end of its ‘zero-COVID’ policy. Inbound passengers may now visit China without quarantining on arrival, and outbound travel may also resume. China maintained some of the world’s strictest restrictions on travel throughout the pandemic. These restrictions not only delayed travel recovery in China, but they also delayed travel recovery in markets that rely heavily on outbound Chinese tourists, such as Hong Kong and Japan.

Removing quarantine requirements sets the stage for outbound travel to recover, but the country’s current surge of COVID-19 cases will hinder growth in the coming months. Throughout the pandemic, travellers have visited close-to-home markets for their first international trips following the reopening of borders. This trend is expected to continue in China.

Neighbouring markets in East Asia set to see the fastest growth in Chinese visitors in 2023

^{Source: Euromonitor International}

Cautious response to China’s reopening

Euromonitor’s latest Travel Forecast Model update, from November 2022, predicted 140% growth for inbound arrivals to China in 2023. The removal of quarantine requirements for inbound travellers increases that prediction for growth. Strong growth may not come immediately, however. In the first 20 days of December alone, nearly 250 million Chinese people may have been infected with COVID-19, according to an estimate by Chinese public health officials.

New restrictions on travel from China

The spike in COVID-19 cases in China has led other markets to cautiously approach the return of Chinese visitors. Japan, South Korea, and the US all have new COVID-19 testing requirements for international travellers from China. These restrictions may make it harder for Chinese people to travel abroad. In addition, testing requirements may dissuade non-Chinese people from travelling to China, for fear of difficulties returning home.

China’s reopening comes just ahead of Lunar New Year celebrations. The heavy amount of domestic travel in this period, combined with the potential for additional surges of COVID-19 infections, makes the strong growth of international travel less likely this winter.

Potential for a sharp increase in international travel to and from China will come in the spring and summer of 2023

^{Source: Euromonitor International}

Key factor for travel recovery in Asia

Pre-pandemic, China was the most important source market for travel in many Asian countries. Uncertainty over the future of international travel to and from China, however, pushed many of these countries to look elsewhere for travellers. Japan, Malaysia, and South Korea, for example, all launched travel promotional campaigns in Southeast Asia in 2022 to reduce their reliance on Chinese visitors. Attempts to diversify tourism sources are likely to continue even with the reopening of China’s borders, as the pandemic has shown the dangers of relying too heavily on one source market for travel.

The markets closest to China will see some of the most immediate benefit from China’s policy changes.

Before the pandemic, Chinese travellers accounted for roughly 65% of inbound arrivals to Hong Kong

^{Source: Euromonitor International}

Even as inbound travel grew in other markets in 2022, Hong Kong struggled without the return of Chinese visitors. The pace of recovery of Chinese visitors to Hong Kong will now be a bellwether for overall recovery in outbound travel from China.

^{Source: Euromonitor International}               

Luxury retailers eagerly await return of Chinese travellers

Shopping has historically been a key component of outbound travel from China.

In 2019, Chinese tourists spent USD50 billion on shopping; more than 30% of total outbound travel spending from China

^{Source: Euromonitor International}

The US is the closest market in terms of shopping’s share of outbound travel spending. Even then, however, the share of shopping within total outbound spending is more than 50% greater in China than in the US.Shopping has continued to be an important feature of travel in China during the pandemic. The world’s largest duty-free shopping mall opened in Hainan in October 2022, and China’s Ministry of Commerce announced plans to create special duty-free shopping areas in five major cities in August 2022. The growth of domestic duty-free shopping in China has been a response to pent-up demand for luxury shopping.

A pivotal moment for travel recovery

China’s removal of quarantine requirements for inbound travel will have a massive impact on the global travel industry. While growth may start slowly, as the country faces a surge of COVID-19 infections, outbound travel is likely to accelerate in the spring and summer of 2023. Neighbouring markets in East Asia will be amongst the first beneficiaries, especially Hong Kong. In the short term, luxury retailers should prepare for this uplift, as shopping will be one of the most important motivators for outbound travel from China. Looking ahead, the welcome return of Chinese travellers will be an important milestone for the travel industry’s global recovery.

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