President-elect Donald Trump and his future Chinese counterpart, Xi Jinping, had a good call yesterday and established a “clear sense of mutual respect,” but if Donald Trump’s campaign promises regarding China are any indication, the relationship could turn sour very fast. Could the 2016 U.S.-China Tourism Year mark the end for improved tourism between the two countries?
Jing Travel breaks down some of the possible implications of the looming Trump presidency for Chinese travel to the United States, as well as the U.S. tourism and hospitality industry in general.
President-elect Trump has emphasized that he’ll impose a 45 percent trade tariff on all imports from China unless China seizes to subsidize many of its key industries. Many political commentators fear that Trump’s trade policy toward China will result in a trade war, which may put serious strains on the strong growth of Chinese tourism to the United States. Whereas the United States has a growing trade deficit to China, US$365.7 billion in 2015, tourism is one of the sectors where the United States runs a significant surplus. Chinese tourists abroad outspend foreign tourists in China by a significant margin, and this spending is a key reason behind China’s trade deficit in the service sector.
An all-out trade war between China and the United States, therefore, puts U.S. tourism exports at risk as it serves as a powerful weapon for China in a potential trade conflict. Whereas tariffs on goods is an area where China perhaps has the most to lose, tourism represents the exact opposite situation. As the case of Taiwan proves, China is no stranger to limiting tourism to achieve political goals.
It’s easier than ever for Chinese people to acquire tourist visas for the United States, and the 10-year visa that was introduced in 2014 has become an important milestone in attracting repeat (and affluent) Chinese visitors to the United States. However, Donald Trump’s anti-immigration campaign platform raises serious doubts about the future of this visa program, which is widely hailed as an important driver of tourism between the two countries. The U.S. Department of State has argued that the 10-year visa arrangement will mutually benefit U.S. and Chinese business development and investment. President-elect Trump’s pledge to protect American jobs and hinder China from stealing trade secrets arguably undermines the investment portion of the visa benefits, underlining the unclear future of this visa arrangement. Another target of Trump criticism has been what he’s called “anchor babies,” or less offensively “maternity tourism,” the practice of giving birth to children on U.S. soil while visiting on tourist visas to grant children U.S. citizenship. The practice is believed to be common among the affluent Chinese, and a crackdown on this practice could result in collateral damage on overall visa policies
Ironically, Mr. Trump has personally benefited from Chinese tourism and Chinese immigration as a businessman. Trump’s hotels welcomes a lot of Chinese tourists, and his Trump Tower was funded by wealthy Chinese individuals that used the investment to apply for EB-5 visas that facilitate immigration in exchange for job-creating investment in the United States.
The last couple of years have seen many Chinese high-profile acquisitions of many U.S. companies in the tourism sector, for example HNA Group’s acquisition of Carlson Hotels and its 25 percent investment in Hilton, Anbang’s attempt to acquire Starwood and its successful acquisition of the Waldorf Astoria, as well as many smaller acquisitions that have received less media spotlight. Many U.S. national security officials and experts, and Donald Trump in particular, are wary of Chinese acquisitions of American companies, and many officials have called for tighter scrutiny of such investments. U.S. tourism stakeholders, only recently the beneficiaries of Chinese outbound investment, could stand a lot to lose if the Trump administration cracks down on Chinese investment in an effort to further its protectionist agenda. Trump himself has however emphasized that he has personally benefited from Chinese real estate buyers and investors.
Cybersecurity, state-backed hacking, and user privacy were all in the limelight during this year’s election cycle. While it may seem entirely unrelated to the tourism industry, it may have significant implications for its new favorite marketing tool: WeChat. Trump has been an adamant critic of Apple’s unwillingness to give the FBI access to one of the San Bernardino shooter’s iPhone, and the row has technology companies concerned about the future of encrypted messaging and online privacy. Foreign messaging platforms such as Tencent’s WeChat that store their data well beyond the reach of American law enforcement, but well within the reach of Chinese law enforcement, could be put under increased scrutiny by the Trump administration as pressure mounts for technology companies to give the government access to user information. Trump has cited China as a bigger concern for what he calls “the cyber”—likely meaning cybersecurity—than Russia, and American user data stored on Chinese server is low-hanging fruit for any efforts by the new U.S. government to safeguard American cybersecurity. What this means for the future of Chinese internet companies remains to be seen, but their important role in Chinese travel consumption is undisputed. If they’re deemed a security or privacy hazard, it could put companies such as Tencent, Alibaba, and Baidu under increased scrutiny—and risks hampering the expansion of their services in the United States.
The upcoming Trump presidency leaves many question marks for Chinese tourism to the United States, but provides the tourism industry with few answers or concrete ideas of things to come. In the end, uncertainty is the main takeaway. Continued growth of Chinese tourism to the United States has been a safe bet for years, but Trump’s various statements about China, trade, and immigration make the future less certain. For Chinese tourism to the United States, one thing is for certain: it can’t be made “great again,” because Chinese tourism to the United States has never been greater—and there’s still plenty of room for growth if policy allows it.
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