Impacts of tourism industry in general
Since tourism began to be considered as an industry from late 1970s, the Chinese government has paid more attention to its economic impacts, and made it a new growth point of the national economy. The economic impacts of tourism appear pervasive and are difficult to measure definitely. However, It plays an increasingly important role in the social and economic development in China. The contribution of tourism can be analyzed from the aspects of the national economic development, the industrial structure improvement, regional balance of development and so on.
Tourism Contribution to GDP
In 1996, China National Tourism Administration (CNTA) for the first time used the term of “total output of China’s tourist industry” in its annual Statistics Report on China’s Tourism Industry, and in the following year, the term “total output of China’s tourism industry” was replaced by another term of “total revenue of China’s tourism industry”. Later in 2001, “total tourism income” was used, and in the Statistics Report made in 2002, CNTA released that “the total income of China’s tourism industry…..equivalent to 5.2% of the country’s GDP of the year”. Hence, the equivalent percentage the total tourism income to the country’s GDP may be used to indicate the importance of the tourism industry in the country at both national and local levels.
It should be noted that China has not yet applied the TSA (tourism satellite account) system recommended by WTO to measure the contribution of tourism to the country’s GDP. In fact, in the national account, there is no specific tourism sector in accordance with the present industrial classification. The indicator for the contribution of tourism industry often used by now is the equivalent percentage of total tourism income to the country’s GDP. This is obviously not accurate and comparable.
Firstly, In China, when tourism contribution to the national economy is estimated, total tourism income, rather than the value added by travel and tourism is applied. Hence, the contribution would be overvalued.
Secondly, according to the current industrial Classification and Code in the national account, the tourist industry is not an independent sector, only travel service (i.e. travel agencies and businesses) is in the category, others such hotel, transport, catering, attractions and so on are classified as independent industry themselves, or part of other industries, having nothing to do with tourism. Accordingly, the economic impacts of tourism on national economy should be undervalued to some extent. It can explain the reason that why the contribution of tourism economy to GDP calculated by CNTA (China National Tourism Administration) with this method is lower than that of TSA by WTTC (World Travel and Tourism Council).
Thirdly, at present, the total income of tourism, in fact, is the aggregate of income of the domestic tourism and that of the inbound tourism receipts, without consideration of the outbound tourism expenditure and the expenditure on imports related to tourism industry in terms of equipment, goods, human resources, brand usage and so on. It is apparently that this treatment is not scientific.
Generally speaking, the current method used in China mentioned above to measure tourism’s contribution to GDP is not appropriate, and more scientific methodology should be considered according to China’s specific situation.
In order to measure the economic impact of tourism more accurately, some local governments have supported projects for developing their own TSA based on the framework commended by WTO. Qinhuangdao city and Guangxi Zhuang Nationality Autonomous Region are among the pioneers. The research findings (see Table 2.3 and Table 2.4 in the Annex 1) show that contribution of tourism industry to the GDP in these two areas is much higher than the national average level, partly because they are more depend on tourism.
Tourism Contribution to employment
In terms of employment, tourism industry has obvious advantages on large scale, low cost, diversified modes, accessible to some disadvantaged groups such as women and etc.
Due to the deficient statistics system, comprehensive and reliable data on tourism employment in China do not exist. There are different estimations on this issue from different resources. The following three resources, for example, give us different visions.
a. According to CNTA, the number of people directly employed in China’s tourism industry is 6.48 million in 2003. What seems clear is that the figure of CNTA reflects only a tiny tip of China’s tourism employment iceberg. At least two reasons exist. First, the number of job indirectly created by tourism is not included. Second, the statistics of direct employment seems incomplete, as it covers only “designated tourism business”.
b. WTTC ranked China No. 95 in the world in terms of travel & tourism economy employment in its report entitled “Impact of Tourism and Travel on Employment and National Economy: China and Hong Kong SPA” in 2003. And it forecasts that China’s travel & tourism industry employment would be 13.6 million, 1.9% of the general employment, the travel & tourism economy employment would be 54.05 million, 7.4% of the general employment. In 2013, the figures would increase to 16.1 million, 2.0%, 65.8 million, and 8.3% respectively.
c. The Cooperative Research Program by the State Reform and Development Commission and CNTA provides a relatively middle-of-the road figure.
Contribution to industrial structure improvement
As a huge developing country in transition from an agriculture society to an industrial society, China has been confronted with the lagging development of the tertiary industry, especially the modern service industry. Tourism industry is rather comprehensive in nature, covering diversified fields, such as transportation, tourist attraction, accommodation, shopping, entertainment, food & beverage and so on. It may relate to all service sectors, both traditional and modern ones. The boom of tourism industry may not only increase the share of service industry in the national economy, but also promote the entire national economy.
Other Impacts
Regional balanced development
China is a country with huge territory comprised of diversified parts. In addition, the open-up and reform started with the un-equilibrium development strategy which was favorable to the eastern region, especially coastal areas. Hence, the gap among different regions has been getting wider and wider gradually. From the middle of 1990s, the central government has tried to keep the balanced development of different regions by the enforcing several strategies such as western development, revitalization of the old industry base in Northeast China and so on. Tourism has been attached importance during these projects. With the investment of central and local governments, and overseas and domestic enterprises, the infrastructure, environment, and tourism facilities in western and northeast China have been improved. Meanwhile, tourism, especially domestic travel implies transferring expenditures from travelers’ origin to destination areas and, hence, has an effect on the interregional distribution of Chinese national income and employment. The role of domestic tourism in the interregional transfer of Chinese purchasing power looks set to rise in the years to come.
Poverty elimination
Growing inequality has become a major concern in China. The gap between the coast and the interior has been widening, along with the disparities between urban and rural areas. Despite the fact that China has lifted millions people out of absolute poverty since 1978, the number of poor still amounts a lot. The role of tourism in poverty elimination has gained increasing recognition in China. PPT (Pro-poor Tourism) has been paid much attention by the governments at each level and some international organizations, such as Asia Bank in recent year. The local people in remote and undeveloped areas such as Guizhou, Yunnan, Guangxi, and so on have benefited a lot from the booming tourism in their hometown.
Impact of international tourism
Impact on the balance of payment
Contribution to the international trade
International tourism is a part of trade in service, and it may help improve the country’s balance of payment (see Figure 3.2 and Figure 3.3). In fact, international tourism has been one the competitive sector in service trade, and inbound tourism has been the country’s number one service export since 1993. The share of international tourism receipts in merchandise export earnings has been on a steady rise.
Because of the statistic system, the impact of international tourism on China’s balance of payment is undervalued in some way. For example, WTTC, in its 2003’s version report, estimated that among the service and goods exports earnings, travel & tourism industry accounted for 7.1%, much higher than the figure showed in Figure 2.3, and this figure would increased to 7.5% in 2013.
International tourism balance of payment
During the last decade, outbound travel by Chinese citizens increased rapidly. Due to the insufficient statistics, it is difficult to measure the economic effect of outbound tourism on the balance of payment. So far, there is no data of Chinese outbound tourism expenditure from CNTA, and the data released by the State National Administration of Foreign Exchange (SAFE) show all the expenditures made by Chinese overseas, regardless of their travel purposes. According to the Yearbook of China Finance Statistics which uses the data from SAFE, in the recent years there were substantial annual surpluses in the tourism balance of payment. However, a clear tendency for a relative growth of the surplus cannot be identified, as there are strong variations in the increase rates (see Table 2.2).
Other Impacts
In addition to economy, impacts of international tourism may be shown in many other fields, including political, diplomatic, cultural and so on.
Improvement of international relations and co-operations
International tourism is known as people-to-people diplomacy, helping to promote understanding and communications among people in different countries and regions. As WTO claims that “Tourism: a tool of peace and dialogue among civilizations”(1996) and “Tourism for international understanding, peace and co-operation” (1984). Even now the economic gains have been stressed in the country’s tourism development policy, however, important function of international tourism in improvement of international relations has never neglected. The agreement on ADS between China and other destination countries may be seen as a sign of good bilateral relations. Various international cultural events such as Sino-French, Sino-Korean and Sino-Russian years with the aim of tourism development has been stressed and advocated by state leaders. It is obvious that international tourism, both inbound and outbound, has helped promotion of international cooperation and collaboration in various fields. Hopefully, a breakthrough in the relationship between both sides of the Taiwan Straits may be made in flow of tourists from both directions.
Improvement of China’s image
International tourist flows may serve as a mirror reflecting the great success of China’s social and economic development during the past two decades since the economic reform. Social stability and economic prosperity of the country attracts more and more overseas visitors to China to see the country and people with own eyes. Increasing outbound travels made by the Chinese citizens may help world to have a better understanding of the contemporary China and Chinese, as well as help Chinese to know more and learn more from the outside world by themselves. In a word, the growing international tourist flow may help China to build up its new image in the international society.
Summary
Tourism is an important sector, and its impact of various kinds may become more obvious with the growth of the industry in China. Possible impacts of tourism development, both positive and negative, should be well monitored in order to ensure its healthy development. Therefore, scientific methodology should be introduced and applied based on the specific Chinese conditions, and reliable and sufficient statistic systems should be worked out.
Pro. Zhang Guangrui, Dr. Song Rui
Tourism Research Center, CASS