Why Chinese Tourist Numbers Have Not Fully Recovered Post-Pandemic

By
Lapusrada Vatanalikit
Patchat Kantakom

Executive Summary

• In 2019, Chinese tourists accounted for 27.6% of Thailand’s 40 million visitors, contributing to 3.2% of the country’s GDP alone. However, as of 2023, Chinese visitors constitute only 11.2% of total visitors, far below pre-pandemic levels.
• The tourism sector’s decline has led to job losses and reduced economic activity across multiple industries, affecting Thailand’s GDP growth.
• Thailand has tried to recoup momentum through various initiatives, i.e. the free-visa policy and BCG model for sustainable tourism.
• Measures should be taken to stimulate Thailand’s economic growth through tourism, for example, leveraging social media to promote varied destinations, providing tourism payout, etc.

Introduction

As the world slowly recovers from the repercussions of COVID-19, the economy’s recovery is more volatile than ever. Thailand, known as the “Land of Smiles”, has always heavily relied on tourism as a cornerstone of its economy. In pre-COVID conditions of 2019, 11.5% of Thailand’s GDP was generated by the tourism sector alone, underscoring the importance of tourism to Thailand’s economy. Particularly, Chinese tourists were the driving force in Thailand’s tourism boom: of approximately 40 million tourists in 2019, 10.9 million were Chinese– 27.6% of the total– the most of all countries, and greater than some regions, such as Europe [Refer to Figure 1].

Figure 1. Overview of Thailand Tourist Nationalities (%) in 2019

The rich tourism offers Thailand exclusive opportunities, such as diversifying and increasing the number of jobs and the overall local economy. The increased demand for various industries fosters the growth of many small and medium-sized enterprises. Subsequently, this influx of tourism-related activities creates a multiplier effect in the economy, perpetuating robust, reliable cycles of economic activity. This includes direct impacts, like more sources for GDP growth, more tax revenue, and foreign exchange earnings; but also indirect impacts, like increased supply chain demand, increased infrastructure development, and enhanced appeal for foreign investment. Consequently, the regulations enforced to mitigate the widespread disease of COVID-19 significantly impacted these industries and slowed Thailand’s economic growth. In 2023, while the total number of tourists has rebounded back to approximately 28 million, the recovery of the number of Chinese tourists has been notably slower, constituting only 11.2% of total visitors– a stark contrast compared to their numbers to 2019 pre-pandemic [Refer to Figure 2].

Figure 2. Overview of Thailand Tourist Nationalities (%) in 2023

. Referring to Figure 3, the impact of these job losses is evident. Pre-pandemic employment in the tourism sector was over 4.3 million people, dropping to 3.9 million in 2020, and as of 2022, recovering to 4.1 million employees. This illustrates the direct impact of COVID-19 on the livelihoods of citizens, wherein many had to be laid off for companies to stay afloat, or their companies had to close operations.

Figure 3. Number of People (in Millions) Directly and Indirectly Employed in Industries Affected
by Tourism (2018-2022)

In terms of macroeconomics, this unemployment creates a cascading effect on suppliers, service providers, and local businesses or SMEs. Overall, this means people, on average, have less income, less spending power, and less economic spending to stimulate Thailand’s GDP. Moreover, the decline in tourism means less money is entering Thailand from foreign sources, especially from key markets like China; ultimately, stunting economic growth. This implies that tourism is a factor causing Thailand’s slow GDP growth of 2.6%, compared to the IMF’s prediction of growth for developing economies at 4.2%. As such, returning China’s tourism rates to pre-pandemic levels will help quicken GDP growth. The following written briefing will explore the reasoning behind the sluggish recovery of Chinese tourist numbers post-pandemic, discuss its economic implications, and evaluate possible strategies.

Analysis of Chinese Tourism Pre-Pandemic

            Prior to COVID-19, spanning from 2016 to 2019, Chinese tourists exhibited distinct seasonal patterns in their visits to Thailand, resembling waves that are characterized by peaks and troughs in tourist arrivals. Depicted by Figure 4, the average (black dotted line) illustrates two general distinctive peak periods of Chinese tourism: February, and July to August; whilst, the least visited seasons came immediately after, evidenced by the immediate decline in September to November.

Figure 4. Number of Chinese Tourists (in Millions) per Month Pre-Pandemic (2016-2019)

These peaks and troughs all coincide with major festivals and school breaks in China, driving annual patterns in outbound travel to Thailand. Particularly, February marks the period of Chinese New Year. This signifies a time of cultural importance where families reunite and partake in traditions, stimulating a surge with families driven for cultural exchange, seeking to travel and leisure abroad. Similarly, the July to August peaks aligns with China’s school summer holidays, the only time when families can bring their children for a vacation together, driving another stream of tourism to Thailand. The period immediately after in September to November symbolizes the start of the school year, thereby reducing the availability for families to travel together, creating a low season for tourism.

Impacts of COVID-19 on Chinese Tourism, and Current Situation

            Thailand was no exception to the impact of COVID-19 on tourism, despite the immense attraction Thailand has as a travel destination. The onset of COVID-19 in early 2020 brought unprecedented challenges and drastic declines in tourism levels. The lockdown was announced in April 2020, and Thailand implemented policies such as full national scale lockdowns, restricting any international travel, and only relaxed these measures in October 2020, requiring a mandated 14-day quarantine regulation for all international travelers. This was further continued into 2021, with unfaltering continuous waves, leading to prolonged regulations. As a consequence, the number of tourists significantly dropped in the year 2020, with a total of 6.7 million travelers, most traveled before the lockdowns. This drop continued into 2021, with a total of 420 thousand travelers [Refer to Figure 5]. However, there are signs of a rebound in the tourism sector with the gradual easing of travel restrictions, vaccination campaigns, and the introduction of travel bubbles. By 2023, Thailand has successfully reattracted 28 million tourists, and it is predicted that in 2024 the number of international arrivals will be up to 35.7 million, just approximately 4.2 million short of 2019, or pre-pandemic levels.

Figure 5. Number of Tourists (in Millions) per Year (2016-2023), and Prediction for 2024

As such, it can be inferred that Chinese tourists have slowly returned in 2021 with only 0.1% of the pre-pandemic tourists returning, signifying that Chinese tourism has not returned to normal [Refer to Fig 6]. In the year 2023, tourist rates were still 32.0% of the year 2019– from 11 million to 3.5 million tourists. This fell short of Thailand’s aimed arrivals of 4 million tourists in 2023. In contrast, other neighboring countries such as Malaysia have now sprung back and even exceeded their pre-pandemic tourist rates– Malaysia rebounding to 108.3% tourists from pre-pandemic, and Indonesia being 107.4%. This is a significantly larger proportion when compared to the recovery of Chinese tourism.

Figure 6. Number of Tourists per

Year	Indonesia	Singapore	Malaysia	China
2019	100.0%	100.0%	100.0%	100.0%
2020	14.0%	12.0%	14.5%	11.4%
2021	0.4%	0.6%	0.1%	0.1%
2022	32.7%	57.7%	45.6%	2.4%
2023	107.4%	97.2%	108.3%	32.0%

A possible reason for the slow return of Chinese tourists may be due to the zero-covid policy that was imposed in China. China’s goal in 2022 was to keep their COVID-19 cases as close to zero as possible. To attain this goal, China implemented mass testing, stringent quarantine for patients, and strict lockdowns across entire cities. In cities that are not as strict, residents had to go through repeating tests and limitations placed upon traveling, decreasing their appeal towards traveling. Thus, while other countries freely traveled internationally, Chinese people were restricted and focused on reducing COVID-19 cases.

To further reinforce this statement, CNN is now publishing news on the soaring airfares across Asia including China to Thailand’s flight. In February of 2022, all airfares within the region were now 33% higher than what it was last year, and some were up to twice the amount. This was a result of the increase in oil prices, labor shortages, and the post-pandemic recovery which has not been stabilized. Moreover, the Chinese government has also restricted the issuing of new passports in early 2020, blocking Chinese citizens from going abroad. In other cases, police have ordered their local citizens to hand over their passports promising a return once the pandemic was over.

Another factor could be due to China’s struggling economy, as their old economic model has been underpinned by the heavy infrastructure and real estate market that is collapsing. Ultimately, this led to weak consumer demand and high unemployment rates that aggravated economic downturns. In 2021, China’s unemployment rates were recovering from the initial COVID lockdown, rebounding from a rate of 6.2% down to 4.9%. However, by April 2022, unemployment rates surged to their highest level since the lockdown, reaching 6.1%. Additionally, consumer confidence, an index that reflects the public’s future outlook on the economy, has been pessimistic. As of April 2022, China scored 86.7 points of 200, indicating doubt in their economy, never recovering above 100 since then, peaking in March 2023 at 94.9 points. Compared with pre-COVID measures, which were consistently around 120 points, signifying a drop in people’s disposable income, as well as willingness to spend money on discretionary activities. Therefore, fewer individuals feel secure enough to justify the expense of international travel, including trips to Thailand, leading to less tourism in Thailand.

The weakened Chinese Yuan has further exacerbated this issue, making international travel less affordable. According to Google Finances, the Chinese Yuan was strongest during the middle of June 2022– with 1 CNY equal to 5.43 THB– however, its value has depreciated ever to 5.07 THB. This is due to the zero-covid restrictions on China’s economy resulting in CNY being weaker, whilst THB was stronger as a result of the country reopening. This suggests that a contributing factor to why the tourist numbers have not significantly recovered to their pre-pandemic state is due to how traveling is more expensive and less desirable, including to destinations like Thailand.

Policies and Initiatives

            Ultimately, China and Thailand are now taking the initiative to improve tourism rates for both countries and the benefit of their respective tourism sectors. Recently, the two countries have just agreed to implement a permanent visa-free entry policy starting from March 2024. This idea originated from their September 2023 agreement to allow visa-free entry for up to 30 days for Thai and Chinese citizens. This agreement would expire in February 2024, however, the response to this agreement was overall positive. Over 22 thousand Chinese tourists arrived in Thailand within the first two days of the visa waiver.^[2]Therefore, a decision has been made between the two countries to permanently implement free-visa. This agreement between the two countries showcases China’s desire to embrace mutual benefits between neighboring countries.

In light of COVID-19, Thailand has also reopened with more sustainable tourism. This reopening is aimed to be a creative way to implement the new-normal directions while still providing safe and sustainable travel. This fits under Thailand’s BCG model, also known as the Bio-Circular-Green Economy announced in January 2021. This initiative announced after COVID-19 has been centered around stimulating growth from high disposable income tourists and more niche market sectors: wellness, gastronomy, cultural, and sports tourism. Furthermore, this initiative also helps enhance the lives of local farmers to improve the environment and strengthen tourist sustainability. The model for different tourism sectors such as hospitality to start sourcing from local communities has also helped generate more charitable income for these communities.

Competition for Chinese Tourism However, as of recently, Chinese citizens have been preferring domestic travel over international travel. In February 2024, during Chinese New Year, the Chinese Ministry of Culture and Tourism reported that there were an estimated 474 million domestic trips taken, a 34% increase from 2023 and a 19% increase from pre-pandemic 2019. This is a result of the Chinese government’s economic recovery strategy, promoting domestic tourism to make up for the loss in foreign tourism. Mainly, this is through promoting various initiatives such as subsidies, discounts, and enhanced infrastructure, which make traveling a more affordable experience.

            Moreover, according to Trip.com, a travel service provider, the top 5 destinations for Chinese tourists in 2023 are Thailand, Singapore, Malaysia, Cambodia, and Indonesia. The number of air tickets booked during the Lunar New Year from mainland China to Southeast Asia has increased by 864% from 2022. However, taking a closer look, a lot of Chinese tourists are now traveling outside of Thailand. This is noticed by the extreme increase in year-on-year travel bookings. Mainland China to Singapore has increased by 499%, Malaysia increased by 584%, and Cambodia increased tenfold. However, Thailand has only increased 101% year-on-year. Therefore, Chinese tourists may now be drawn to other Southeast Asian countries, with more significant increases compared to Thailand’s slowed tourism growth, which may also be due to Thailand’s renowned popularity prior to COVID-19.

            Malaysia had the greatest increase in Chinese tourism rates and it is predicted to be because of a few factors. Firstly, Malaysia has increased direct flights from major Chinese cities to Malaysia, making traveling much more convenient and efficient. Secondly, Malaysia offers a more affordable traveling experience compared to Thailand. Moreover, Malaysia is home to a large group of Chinese individuals and the widespread use of Mandarin makes Malaysia extremely culturally compatible with Chinese tourists. Lastly, Malaysia has also implemented the visa-free policy with China in late 2023, therefore an increase in Chinese tourists in Malaysia will most likely continue.

Outlooks and Possible Strategies

Though, the outlook for the recovery of Chinese tourism in Thailand is optimistic, especially with the free visa initiative providing immense momentum for the first step in recovery. With the government setting a goal of 8 million visitors, it is likely that the goal will be met, and possibly surpassed. However, it is safe to say that there is still a long way to go to surpass pre-pandemic numbers. As such, the Thai government could implement initiatives such as the following. Heavily promoting Chinese New Year in Thailand, especially through the forms of social media popular in China. This involves creating engaging content that is attractive to Chinese people and posting it on Weibo, Little Red Book (Xiao Hong Shu), and WeChat to show Thailand’s efforts in cultural diversification and unification, especially during a crucial festival in their year. Mainly, this would be through posting visually striking photos and short videos of celebrations in Chinatown or other locations with large Chinese heritage. However, it could also include creating special Chinese New Year promotions and events across Thailand, such as exclusive hotel packages and themed shopping promotions. Thus, by leveraging these specific platforms, Thailand could effectively communicate its commitment to honoring Chinese culture and traditions. This will make Chinese people feel at home and celebrated, whilst still being able to travel and explore the rich culture and beauty of Thailand.

            Another possibility is to diversify destinations beyond the known tourist spots. This would not only increase tourism rates but also help distribute the economic benefits of tourism throughout Thailand. Thailand’s tourist authorities could launch a comprehensive campaign to showcase lesser-known gems of Thailand, presenting them as unique to Bangkok or the typical tourist destinations. This could include promoting alternatives to popular beach destinations like Phuket and Pattaya on Chinese social media. Instead, Thailand could promote specific islands such as Koh Kood and Koh Lanta, and focus on their regional specialties, which would provide Chinese people with a newer experience and cure their oversaturation.

            Additionally, an initiative could be increasing the usage of soft power in Thailand, to subconsciously promote and appeal to a wider audience, especially through our popular stars such as Lisa from Blackpink. Thailand has many popular celebrities whether that be popstars Lisa and Milli who have performed on the stage at Coachella and heavily promoted Thai culture[Refer to Figure 7 and 8], or actors like Mile and Apo from the famous BL series KinnPorsche, which was widely broadcast in China through a Chinese streaming platform, IQiYi [Refer to Figure 9]. All of these individuals attract a wide and unique range of audiences. Lisa is known worldwide, Milli is more well known in the States, Mile and Apo are extremely popular in China amongst teenagers and young adults. Through the government’s support for these individuals, and subtly incorporating elements of Thai culture or Thailand’s tourist appeal, tourism can be boosted. An example of how this is done is through the media and entertainment in South Korea. As the Korean Wave of using entertainment to represent significant culture became more popular, the tourist numbers initially increased fourfold in 1998 and have continuously grown ever since.

Figure 7. Milli on the Coachella Stage in 2022 with Mango Sticky Rice

Figure 8. Lisa’s New MV Rockstar Filmed at Chinatown

Figure 9. KinnPorsche BL Series Streamed on Chinese Platform

Lastly, implementing tourism payout could create an incentive for Chinese tourists to vacation in Thailand. In Taiwan, the government offers to pay 500,000 tourists NT$5,000 or approximately 5,700 Thai Baht through a lottery system. This initiative is brought up as an effort to attract at least 10 million visitors by 2025. The incentive has been working well in Taiwan with a total of 648,348 tourists in February 2024 compared to 589,961 in January. Therefore, it would be beneficial for Thailand to do something similar to the incentive to help boost tourism rates. However, ultimately, these initiatives must be part of a broader coordinated strategy to remove Thailand’s dependency on tourism. Albeit tourism has historically driven Thailand’s economy, the previous 5 years have starkly illustrated the vulnerabilities and uncertainties that relying on tourism creates. Thailand must transition to the diversification of its economy beyond tourism. This not only entails promoting sectors under the BCG model, but also creating conditions that allow stable employment. Improving education infrastructure would provide people with the skills required to excel in these emerging industries; and, implementing policies that support SMEs aligned with the BCG model would attract investment and stimulate growth in these sustainable sectors. Only through these measures will Thailand build a more sustainable and resilient economy that is less vulnerable to economic shocks.

Lapusrada Vatanalikit Patchat Kantakom