November 25, 2015, by editor
Tourism and China’s Development
Written by David Airey,
In our book dealing with the development of tourism in China since 1949 we emphasise the significance of the public-policy making context and point to the ways in which, in this policy environment, tourism, at least during the early years of change after 1978, was often in the vanguard of, and pointed the way to, subsequent developments. As China developed as a market economy, tourism has taken a place similar to that found in other market economies. This brief commentary outlines the development of tourism in China in its policy context drawing attention particularly to the ways in which it pointed to change in China during the transitional period.
The developments are outlined in five distinct policy periods. In period 1, (1949-1978) during Mao Zedong’s time of “Revolutionary and Enthusiastic Socialism” tourism’s existence was essentially as a political and diplomatic vehicle. Domestic tourism hardly existed, outbound travel was confined to that organised by the government, and inbound tourism was limited to visitors who could make a political contribution. This began to change under Deng Xiaoping’s leadership (1978-1997) of “Evolutionary and Pragmatic Socialism” when in period 2 (1978-1985) tourism transited to being viewed as economic activity, in period 3 (1986-1991) it was seen as an economic industry, and in period 4 (1992-1997) it was noted as an important industry. By the time of the collective leadership of “Public and Harmonious Socialism” starting in 1997 tourism has been seen as a multifunctional strategic industry.
These developments set the scene for the rapid growth of all forms of tourism with international visitor arrivals growing from 1.8m in 1978 to 128m in 2014, domestic visitor arrivals from 200m in 1984 to nearly 2000m by 2010, and Chinese outbound tourists from 4.5m in 1995 to about 117m in 2014. Similarly, hotel capacity expanded from 137 hotels in 1978 to 14,000 in 2008, tourism employees from 37,000 in 1981 to approaching 3 billion and foreign exchange earnings from tourism rising from 2.7% in 1978 to 7.2% in 1999 before falling back to 3.3% in 2009 as other sectors of the Chinese economy increased their export activities. China is now the most visited country in Asia and the fourth most visited in the world.
Of course this transformation in tourism is very much a part of the transformation of China itself from a planned economy to a market economy. Notably, it is in part the consequence of the three shifts in political ideology from ‘politics in command’ and ‘class struggle’ to ‘economic development and modernisation’; from ‘planned economy’ to ‘market economy’; and from the central role of government to a more people-based approach. As we put it in relation to the third shift “the quality of life of the Chinese people came in for greater attention and tourism, particularly domestic tourism, was acknowledged as an important element of the quality of life.”
As a first step in the transformation starting in 1978, a key driver was the recognition of China’s shortage of foreign exchange with the leadership identifying tourism as potentially the second largest foreign exchange earner, after the energy sector. With abundant tourism resources China was seen to have appeal to international tourists and as one Chinese leader put it, “tourism was an industry characterized by less investment, quick rewards, low costs and high profits.” What is more tourism development was seen as a strategic component of China’s economic reform and open door policy with travel permission being extended to all foreigners not just to invited guests and selected tourists. Deng Xiaoping himself was central to this change in welcoming international tourists making six speeches between late 1978 and early 1979 on the economic development of tourism – a record for the leader of any country, let alone one whose people had just emerged from the Cultural Revolution.
However, while the policy-makers turned towards economic development, especially related to foreign exchange earnings, they were not at this stage ready for the development of the economy outside the central plan. As a result hotel development could not keep up with international tourist demand. This provides the background to one of the most interesting features of the role of tourism in the development of modern China. The hotel sector was not in fact considered as a part of the planned economy in the same way as the industrial sector hence when Deng Xiaoping initiated the decision to attract foreign investment for hotels from the developed world, this did not pose a frontal challenge to the planned economy. In this position as a key informant for our study pointed out “The first three projects in introducing foreign investment were all tourism related. They were in air catering, the Beijing Jianguo Hotel and the Beijing Great Wall Hotel.” And with the foreign investment came foreign management styles that went on to have an influence in the transformation of China.
Once started on this course the growth of tourism demand, initially from overseas, inevitably put continued pressure on bed capacity and quality with the resulting imbalances demanding institutional reform. Here the almost experimental Jianguo hotel provided a model of modern management that eventually permeated the hotel sector and beyond, albeit not always smoothly. Supervisory government agencies were often reluctant to implement change. In the debate and tension between the centrally planned model and market-oriented economy, tourism, especially international tourism to China, was very much a representative of the latter. However, as a relatively small service sector in a system that prioritised primary and secondary industries, tourism’s market potential and strong market growth were not enough to establish a market-oriented tourism policy against the dominance of the planned economy. But its exposure to international market norms did lead to the introduction of another change in China – quality standards in the form of hotel star rating – in an attempt to deal with quality issues.
The shift to a market economy for tourism waited until 1992 when the Socialist Market Economy was announced. This provided the framework for tourism to be developed as a market-driven activity. This meant that the policy for growth in tourism was no longer confined to international arrivals with emphasis on the associated direct benefits to the economy but could now extend also to market driven outbound and domestic tourism. At the same time policy toward tourism also extended to other areas such as the development of a regulatory framework for tourism rather than an administrative one; the recognition of tourism’s role in regional development; the importance of tourism in leisure time and life quality more generally; and the role of tourism in consolidating the socialist system and promoting national coherence with for example ‘Red Tourism’ to sites related to the communist revolution. With this background tourism in China is set to play a comprehensive range of functions.
In summary therefore tourism policy in China has gone from a period when there was virtually no policy to foster tourism, initially to one where (international) tourism was seen as a device for economic development and modernization, then to a long period during which tourism moved to a market orientated position in a China that still followed a planned-economy model and finally to much fuller market orientation embracing incoming, outgoing and domestic tourism. In this process tourism moved from being virtually non-existent, to occupying positions that were pioneering in a country engaged in policy transformation, to arrive at a point in which tourism in China, as in most other jurisdictions, occupies a position of great diversity in the policy space, albeit with a stong Chinese flavour.
Professor David Airey is Emeritus Professor at the University of Surrey. His research interests include tourism education; tourism policy and organisation; economic aspects of tourism. In 2007 he became co-chair of the UNWTO Education Council. He retired from his full-time post in 2009 but remains as Professor of Tourism Management at Surrey, combining this with other work both in the UK and overseas. Image Credit: CC by Chris/Flickr.