As China’s Tourists Stay Home, Asia-Pacific Faces Economic Strain, ADB Warns

A slowdown in outbound tourism from China significantly impacted GDP and exports across Asia-Pacific, especially in East Asia and the Pacific. The ADB study urges regional economies to diversify tourism markets and enhance resilience against future shocks.

A recent working paper from the Asian Development Bank (ADB), in collaboration with Infinite Sum Modelling LLC, shines a spotlight on the far-reaching economic effects of outbound tourism from the People's Republic of China (PRC) on Asia and the Pacific. Authored by Badri Narayanan Gopalakrishnan, Veronica Domingo and Sanchita Basu Das, the study employs the GTAP (Global Trade Analysis Project) computable general equilibrium (CGE) model to simulate three pivotal periods: the pre-COVID boom of 2017–2018, the pandemic-triggered collapse of 2019–2020, and the slow, cautious recovery of 2021–2022. The paper reveals how deeply entwined China's outbound tourism is with regional GDP growth, export performance, and sectoral development, particularly in East Asia, Southeast Asia, and the Pacific.

Before the COVID-19 pandemic upended global travel, Chinese outbound tourism was a critical economic engine. In 2019, China was not only the world's largest tourism spender but also one of the most important source markets globally, sending out 120 million travelers and accounting for 17% of global tourism expenditure, over $254 billion. Much of this tourism was concentrated within Asia, with top destinations including Hong Kong, Japan, Thailand, and the Republic of Korea. Smaller economies like Palau, Mongolia, and Vietnam also heavily relied on Chinese visitors, who constituted over 30% of their total inbound arrivals. China's travel imports represented 13.8% of global travel imports in 2019, underlining its financial footprint in the global tourism industry. For many economies in Asia and the Pacific, this flow of visitors was more than a seasonal boost, it was a foundation of economic stability.

A booming baseline: The 2017–2018 pre-pandemic scenario

The first simulation conducted in the study represents a "business-as-usual" scenario for 2017–2018, capturing the beneficial economic effects of high Chinese outbound tourism in a stable global context. Though GDP percentage changes across regions were small, the absolute gains were telling. East Asia gained over $125 million in GDP, thanks to strong tourist flows and deeply integrated service supply chains.

The Pacific, where tourism forms a large chunk of national income for many island nations, saw a 0.02% increase in GDP, the highest relative gain among the subregions. In terms of exports, East Asia's recreational services jumped by nearly 25%, and accommodation and food services rose by almost 6%. These gains were mirrored in Southeast Asia and the Pacific, where even sectors like air transport and retail trade experienced positive shifts. The simulation underscores the robust role that outbound Chinese tourism played in bolstering regional economies.

Travel vanishes: The COVID collapse of 2019–2020

The second simulation reflects the grim reality of 2019–2020, when China's strict lockdowns and global travel bans led to an almost 90% reduction in outbound tourism. The economic pain was immediate and widespread. East Asia's GDP dropped by over $526 million, while the Pacific experienced a contraction of 0.05%, the steepest in relative terms among the subregions.

Service exports tied to tourism nosedived. In East Asia, exports of recreational services plummeted by 33%, and accommodation, food, and beverage services declined nearly 28%. Across other subregions like Southeast Asia and Central and West Asia, the pattern was similarly grim. Air transport exports declined sharply, and retail trade took a substantial hit. The simulation shows how the once-dependable engine of Chinese tourism turned into a source of economic vulnerability almost overnight.

Tentative steps forward: Recovery during 2021–2022

The third simulation models the tentative recovery period of 2021–2022, as China began allowing limited international travel through fast-track agreements for essential business visits. While border restrictions remained tight, these select openings gave the region some breathing room. Southeast Asia posted the highest GDP gain in absolute terms, at $81.7 million, followed by East Asia at $74 million.

The Pacific, once again, recorded the highest relative gain in GDP at 0.02%. Sector-wise, Southeast Asia saw the most notable improvements, with exports of recreational services rising 6.8% and accommodation services increasing nearly 4%. However, these gains were modest compared to the pre-pandemic highs, reflecting the continued drag of China's zero-COVID policy and the limited scale of reopened travel channels. Still, the gradual uptick signaled the beginning of a rebound for tourism-dependent economies.

Lessons learned: Diversify, connect, and innovate

The study concludes that overreliance on a single market, especially one as dominant as China, exposes economies to major external risks. Diversification of source markets is critical for building resilience in the face of future shocks, whether they stem from health crises, geopolitical tensions, or financial instability.

The authors recommend enhancing regional air connectivity, liberalizing visa regimes, and improving travel facilitation measures to attract tourists from a broader range of countries. At the same time, developing compelling new tourism products tailored to different market segments can expand appeal.

Strengthening regional and domestic tourism, through frameworks like ASEAN, CAREC, or SASEC, offers another strategy for hedging against global disruptions. Technology also has a role to play; digital tools can improve traveler experiences, enable contactless transactions, and streamline border processes.

In essence, while China will remain a powerful and influential tourism source for Asia and the Pacific, the pandemic has made it clear that economic resilience depends on more than one strong partner. The path forward lies in strategic diversification, smarter infrastructure, and a more connected, inclusive vision for tourism. The insights from this study serve not just as a post-crisis evaluation but as a strategic guide for future-proofing the region's travel economy.