Travel Becomes a New Growth Engine for China

0:00Welcome to Swords on the Market. I'm Qianlei Fan, Morgan Stanley's Hong Kong China Transportation Analyst. Today, I'll share my thoughts on why travel is quickly emerging as one of key drivers of China's economic rebalancing. It's Tuesday, March 3rd at 2 p.m. in Hong Kong. I've just gotten back from my Lunar New Year trip to mainland China. With the longest Chinese New Year break in history, people were out roaming, exploring, laughing, and the whole country felt like it was buzzing with people on a mission to enjoy every minute. According to the Ministry of Culture and Tourism, total domestic tourism spending recorded a robust 19 % year-on-year growth during the holiday.

0:51In fact, China's tourism industry isn't just rebounding after the pandemic. It's entering a structurally stronger phase, supported by policy tailings, demographic shifts, and a clear pivot toward experience-driven consumption. By 2030, tourism revenue could reach RMB 12 trillion, equal to roughly US$1.7 trillion, implying 11 % annual growth from the mid-2020s. Over the next five years, cumulative domestic and inbound revenue may approach RMB 50 trillion, or US dollars 7.2 trillion. That scale makes travel more than a cyclical recovery. It's becoming a core pillar of China's consumption-led growth.

1:40We expect tourism's share of GDP to rise to about 6.7 % by 2030, up from 4.8 % in 2024. Domestic travel remains the backbone. People are not just traveling again, they are traveling more than before. Policy is reinforcing demand. Extended public holidays, new school breaks, and event-driven tourism are boosting activity. In 2025 alone, around 3 ,000 large-scale performances attracted more than 43 million attendees. And spending reflects that shift. Domestic tourism spending reached RMB 6.3 trillion in 2025, about 11 % above pre-COVID levels. Even with slightly lower spending per trip, more frequent travel is lifting overall revenue.

2:39International travel is emerging as a second growth engine. By 2030, inbound travel could represent 16 % of total tourism revenue. In late 2025, inbound visitor growth in major cities was up about 30 % to 50 % year-over-year, supported by expanded visa-free access, which now accounts for the majority of foreign arrivals. These visitors often stay longer and spend more. Outbound travel is strengthening too. International air traffic grew 22 % in 2025, far outpacing domestic growth, and now contributes a meaningful share of airline revenue. Demographics and technology are reinforcing the trend. Younger consumers prioritize travel while older households, with substantial savings, are beginning to spend more as services improve.

3:37At the same time, smart hotels, virtual reality attractions, and data-driven operations are enhancing engagement and willingness to pay. This isn't just pent-up demand. It's policy, demographics, technology, and supply aligning at once. with travel at the center of China's consumption story. Thanks for listening. If you're enjoying the show, please leave us a review wherever you listen and share thoughts on the market with a friend or colleagues today.

4:12Qianlei Fan:The preceding content is informational only and based on information available when created. It is not an offer or solicitation, nor is it tax or legal advice. It does not consider your financial circumstances and objectives and may not be suitable for you. Thank you.