James Liang: The Economic and Strategic Importance of China’s Visa-Free Policy for Six Countries

The economist, demographics expert, and Co-founder and Chairman of Trip.com Group sheds light on the value of inbound travel to China.

Starting Dec. 1, citizens of France, Germany, Italy, the Netherlands, Spain, and Malaysia can enter China for up to 15 days without a visa. We are happy to share an analysis from Mr. James Liang, who co-founded one of the leading global travel service providers but is also a famous economist and public intellectual in China. The text is sourced from his office.

Mr. James Liang is one of the Co-founders and the Chairman of Trip.com Group. He is a renowned Chinese population economist and a Professor of Economics at Peking University's Guanghua School of Management.

In 1999, Mr. Liang was instrumental in the founding of Ctrip and has served as the Executive Chairman of the Board of Trip.com Group since 2003. He also held the position of CEO from 2000 to 2006 and from 2013 to 2016. Today, Trip.com Group is a global leader in one-stop travel services.

In the fields of population economics, entrepreneurship, and innovation research, Mr. Liang has authored several books, including “Population Strategy”, "Too Many People in China?" and "The Demographics of Innovation," as well as a population allegorical novel titled "After Immortality." He has also published numerous articles on human resources and innovation in top academic journals. In 2022, he founded the YuWa Population Research Institute.

The Economic and Strategic Importance of China’s Visa-Free Policy for Six Countries

On 24 November 2023, the Ministry of Foreign Affairs of China announced that China has decided to extend unilateral visa-free treatment to travelers holding ordinary passports from six countries, namely France, Germany, Italy, the Netherlands, Spain, and Malaysia. This measure signals clearly that China will stay committed to opening up and reflects a consensus between the private and public sectors regarding the development of China’s inbound tourism.

An efficient and hassle-free visa application process represents a great start for inbound travel. Furthermore, addressing challenges in payment and internet access may lead to a significant increase in the number of inbound travelers to China. This influx of foreign visitors will generate substantial foreign exchange earnings, boost China’s global standing, foster technological innovation, and enhance the international competitiveness of the Chinese economy.

The economic value of inbound tourism to China

Increasing inbound travel, as a result of unilateral visa-free entry, will help boost service exports from an economic standpoint. The visa-free policy is expected to reduce export barriers, which will lead to foreign exchange earnings and GDP growth, demonstrating significant economic value.

Domestic tourism has become a major growth area for the Chinese economy. Many foreign travellers in the past were drawn to China’s unique historical, cultural, and natural offerings, but China has far more to offer, with futuristic cities and infrastructure as well as luxurious hotels and resorts. During the pandemic, I visited many tourism cities in China, and I noticed that much of China’s transportation infrastructure, such as roads and high-speed rails, and many tourism facilities like hotels have achieved world-class standard.

There is still room for improvement for inbound tourism. Its contribution to China’s overall economy has remained relatively modest in recent years. In 2019, the revenue from China’s inbound tourism was USD 77.1 billion, accounting for just 0.5% of the national GDP. In comparison, in many other major economies, inbound tourism revenue accounts for over 1% of their GDP: 1.05% for the United States, nearly 2% for the United Kingdom, 2.38% for Italy, 2.43% for France, over 7% for Spain, and over 10% for Thailand.

If China’s total inbound tourism revenue is raised to 1.5% of the national GDP, matching the average level of other countries, it would result in an annual increase of CNY one trillion. The calculation only covers the direct revenue from tourism itself and does not yet include the peripheral revenue from related investments, foreign student inflow, and property transactions. The total economic benefits may well exceed CNY one trillion in foreign exchanges, which could consequently increase the international competitiveness of the Chinese currency.

The strategic value of inbound tourism

The growth of inbound tourism is an indicator of a country’s openness to the world. As a long-term national strategy, China’s opening-up policy can drive the global competitiveness and innovation capabilities of domestic enterprises.

In my book Population Strategy, I extensively discussed the importance of global communication for technological innovation. The key to innovation lies in seamless exchanges between Chinese and international researchers. While China has excelled in the exchange of goods, it still has room for improvement in the exchange of information and people. Innovative ideas not only appear in academic literature or product documentation but also emerge from the minds of individuals. As such, mutual visits serve as an irreplaceable method of fostering profound exchange.

Historically, the world’s innovation centres tend to be hubs for people-to-people exchanges. Ancient Rome and Chang’an (today’s Xi’an), for example, were renowned for their cosmopolitanism. The success of the United States in innovation also owes much to its open immigration policy and its acceptance of foreign students, with half of its high-tech companies founded by people born outside of the country. The idea of studying abroad or immigrating is often sparked during travel. If travellers have a positive experience in a particular country, they are more likely to consider studying, working, investing, or immigrating there. As a result, tourism can not only generate revenue but also leave a significant impact on technological innovation.

Addressing challenges in inbound tourism

While applauding China’s bold move to expand the visa-free policy, I have high hopes for further measures to address other obstacles faced by tourists. Visas are just one aspect; a more significant task is to elevate the overall experience and convenience for visitors to China. For the long-term development of inbound tourism, sustained efforts are needed in the following four areas.

1. Streamlining the visa process. The extension of the visa-free policy is a positive attempt, but there is still room for improvement compared to other countries. China could contemplate offering visa-free status or e-visas, such as to visitors from developed countries. When I visited India a few years ago, I found that the entire visa process could be completed online. More and more countries, such as Turkey, Vietnam, and Australia, have also adopted e-visa programs. Based on China’s current technological capabilities, it should be feasible to allow most applicants to obtain electronic visas online and to significantly improve the efficiency of the visa application process.

2. Improving overseas perceptions. Influenced by negative public opinion abroad, some foreigners may have developed the false impression that Chinese people are distant and xenophobic. Therefore, it is necessary to demonstrate the friendliness and inclusiveness of Chinese society. While China has its distinct history and culture, it shares a common future with the global community. Common values such as environmental protection, care for family and the pursuit of shared prosperity, should be emphasised. Tourism is also an effective way to promote a positive national image. For instance, Trip.com Group and the China International Culture Association have jointly released the tourism promotion video “Nihao! China,” which is a good start for facilitating cross-cultural understanding.

3. Enhancing services like payment and internet access. Electronic payment has become so prevalent in China that foreign travellers may find it inconvenient to use cash in the country. Government agencies, tourism platforms, and payment companies have been actively seeking solutions.

Another challenge for tourists in China is internet access, which makes it difficult for them to stay in touch with their friends and family back home. Currently, they may have to resort to expensive or cumbersome options. I hope that relevant departments and enterprises can address the issue and provide them with a more convenient and affordable experience.

4. Internationalising social services such as education and healthcare. Beyond sightseeing, China should encourage travellers to stay longer and provide a more immersive experience for them, so that they are able to study, explore, work, and live with ease. This requires extra efforts to provide expatriate-friendly services, such as international education and healthcare. These measures can drive the internationalisation of Chinese cities, attract global talent, and stimulate investment in related industries.

Conclusion

China’s opening-up policy has a great impact on inbound tourism and the recent unilateral visa-free policy for six countries is a positive step. Higher levels of inbound tourism will be able to create enormous economic value, promote cross-cultural understanding, foster technological innovation and enhance global competitiveness. To achieve these goals, much more can be done in the areas of streamlining visa applications, improving overseas perceptions, facilitating payment and internet access, and internationalising social services.