China

In response to a request from the Chinese Government, the World Bank Group has prepared the following short note considering the role that increased support to the tourism... Show More + sector can play in stimulating consumption in the face of the current crisis. This note addresses three related questions: (i) does China's tourism sector comprise a relatively attractive mechanism to stimulate consumption in the short-run? (ii) In light of global trends, what are options that the Government may wish to consider to stimulate tourism and overall consumption, and iii) what are the trade-offs the Government should consider, given the structure of China's economy and tourism sector? This note was developed through consultation with World Bank Group experts on tourism and on China's economy, and draws upon the most recent information from sector studies and global tourism organizations. In summary, there appear to be multiple opportunities for China to increase consumption through stimulating tourism. This note focuses primarily on domestic tourism, which accounts for a significantly larger share of tourism's contribution to China's economy and employment than international tourism. Given that the international financial crisis has already, and is continuing to impact travel from source market countries, a focus on the domestic market is prudent in the short term. Chinese expenditures on travel and entertainment, culture and education account for about fifteen percent of consumption, or about eight percent of Gross Domestic Product (GDP). Assuming half of this is tourism; this could indeed make a significant contribution to demand and consumption, if demand can be increased in the short run. Other countries are actively taking a number of measures to stimulate tourism, and this note highlights a few of them. However, the Government will want to more rigorously analyze the trade-offs that come with possible measures, given the specifics of China's tourism industry and economy. Show Less -