ADM – EA Consulting

ECMO – EuChina Market Relations Observatory is actually involved in several activities concerning research and analysis about commercial topics that can be considered as crucial for chinese economy and the global scenario (in particular if we think about China as global supply hub or crucial market for several sectors)

In particular ECMO is introducing several researches and articles that concern industries from China and related re-actions from key- operators or market on facing with Coronavirus crisis.

Today we publish an article that represent preliminary introduction by the Observatory on a serie of studies regarding Tourism in China.

1. The general situation and the “Chinese model”

Six months have passed since the first case of Coronavirus in China which not only radically changed the lives and habits of the world’s population, but is also having a strong impact on the dynamics of international markets and their economies. In this sense, China is the second largest economy in the world and is the most important in the Asian continent, which has experienced a sharp slowdown in the service industry, sales and investment sector due to Coronavirus, creating a domino effect on the whole ASEAN area. The health emergency that has now reached a global level represents the biggest challenge ever faced since the time of the SARS of 2003, but the Chinese leadership seems to have immediately adopted prevention and containment measures fast  and effective enough that the “Chinese model” has allowed the People’s Republic of China to present itself as a leading country at the eyes of the world which demonstrates how the rapid spread of the virus can be reduced or even stopped. For this reason, many western countries look to China as a model country in the hope of predicting and limiting those economic damages that according to many experts are considered devastating if the right measures are not taken quickly and in the right ways.

2. The first measures by Chinese government

In a difficult attempt to contain the spread of the virus, China promptly put in place severe restrictions that affected the entire Chinese population: closure of all commercial activities, restrictions on transport and movement, closure of public places including offices and schools, and finally declared a state of health emergency for the whole country. While the rest of the world is in full lockdown and is dealing with the first phase of the epidemic, the Chinese dragon has long since put in place its slow but steady restart especially thanks to the readiness of its leadership with interventions aimed at healing the Chinese economy such as 3000 billion yuan ($ 425 billion) in the form of automatic stabilizers, tax cuts, reductions in pension contributions, tax reliefs, subsidized loans to families and SMEs, extraordinary bond issues and low bonds cost. The Chinese central bank (PBoC) also intervened with the reduction of the mandatory reserve requirements, extraordinary loans, the cut in interest rates and repeated liquidity injections. As a strategic choice, the Chinese government has also decided to support investments in the digital sector, a sector that in this epidemic has played a fundamental role where thanks to several Apps created on purpose, the Chinese authorities have been able to control and track all the movements of the people by measuring their possible contagiousness with the use of information from mobile phones and portable devices. For example, using Alipay or Wechat, all you need to do is enter your personal data, scan your face and the App generates a QR code which, based on the color (green, yellow, red) indicates whether or not you can leave the house.

Despite the government’s major interventions for economic recovery, in many cases the inevitable could not be avoided, according to the Tianyancha database, the health emergency forced half a million Chinese companies to close, where about half had less than three years; and the number of closed companies could be even higher if it were not for the timing required for bankruptcy proceedings. Considering this aspect, it is easy to think that the sudden closure of many companies is the main cause of the increase in the unemployment rate which has reached 6.2% and confirms the difficult situation in which many Chinese citizens find themselves because of the virus.

 3. The recovery of Chinese tourism

With the reduction of infections and containment measures that have proved harsh but effective, China is now preparing to enter a new phase and gradually aims to return to an apparent normalcy starting from the tourism sector that represents for the Republic People’s Chinese one of the most important resources. According to the data provided by the Chinese tour operators, domestic tourism has finally registered an important growth that arrives after three months since the virus was first discovered in Wuhan, these are the first encouraging data not only for Chinese economists but also for those who look to China as a possible hope for recovery for the future. Data also confirmed by China Skinny, one of the leading companies in the field of marketing and digital research that months ago predicted an explosive recovery of Chinese tourism comparable to the post SARS of 2003, when flights recorded a 200% increase on the first national holiday. So history repeats itself again, thanks to the arrival of spring and the beautiful days accompanied by an unusual blue sky, Chinese people seem to have forgotten the days when they were forced to stay at home in compliance with the heavy restrictions adopted by the government that for the occasion of the holidays like the commeration Death and the workers’ day he gave consent for the diffusion of vouchers, discount coupons and coupons to facilitate the restart of domestic tourism as well as using the usual sanitary prevention measures. Based on the tourist attractions scattered throughout China, Beijing has decided to make available 10 billion yuan in the form of coupons that provincial and municipal administrations issue thanks to electronic payment platforms such as Alipay and Wechat which allow purchases for consumer goods of everything from restaurants to tickets to all-inclusive holiday packages. With the progressive reopening of almost 70% of tourist sites in China, forced to control and limit the number of visitors, there are numerous government communications addressed to citizens in implementing all the protection measures such as the use of masks, do not cease, hand washing, the use of disinfectants and compliance with safety distances. For the first weekend of May, the Chinese transport ministry expects 117 million people to travel, even if there are specific rules that each person must follow, such as the obligation to book in advance through the applications accessible to everyone, to scan their own identity card, body temperature measurement through scans and the communication of the green health code that certifies the medical health of the person.

In April there were many attractions and places that have reopened to attract tourists in an attempt to unlock internal tourism: Beijing the great capital of China famous for its modern architecture and ancient sites, the west lake of Hangzhou celebrated by poets and writers for its countless temples and gardens, the Huangshan mountains in Anhui portraits in several Chinese paintings, the large wild goose Pagoda symbol of the city of Xi’an, and the Shanghai city icon of Chinese development and wealth; according to the Ctrip website, the number of group tours recorded a 366% increase on a monthly basis and the sale of online tickets for visiting the tourist sites increased by 114%, positively meeting the economic push adopted by the government.

4. The strength of the Chinese dragon

China has always shown its determination and its tenacity in overcoming the great crises, and this year the  worker’s Day in a such context, takes a particular significance in a period when the union of 1,4 billion Chinese in the name of unity and mutual cooperation seem to be the only heroes who fought the fight against the epidemic with sacrifice and pain. Xi Jinping himself during the numerous conferences did not miss an opportunity to spend words of praise and gratitude for the Chinese people who in a particularly difficult moment managed to be an example for all the peoples of the world. The great strength of the Chinese people will push China to return to the previous levels of speed and development that the whole world has always been used to seeing, even more.

Just like a thunderbolt, this pandemic hit China in a very short time and in a particularly prosperous moment for its internal economy, following accusations for having hidden facts concerning the first infections, it had to suffer a serious blow to its international reputation, however it is still too early to calculate actual damages, losses and liabilities. Researchers, analysts and experts in other sectors are responsible for monitoring and controlling the trend, and if we can say, the economic recovery of the People’s Republic of China, which is barely at the first interventions implemented by the government. It would be interesting to see through targeted studies, reading and translation of Chinese sources, not only the opinion of the Chinese community regarding the support actions taken by the government but also how and what can be taken as an example to restore our Italian economy, perhaps starting again from one of the sectors in which we are famous all over the world: tourism.

Jian Piero Morales

ECMO –  Division for Research on Contemporary China