China's inbound tourism enters a new phase of upgrading from visitor-volume recovery to consumption value creation

Overview

The report examines the drivers, consumption spillovers and policy implications of China's inbound tourism recovery. Its core conclusion is that visitor volumes have surpassed pre-pandemic levels, and the industry's next phase should shift from visa-driven volume recovery to improving visitor spending, service quality and the value of tourism exports.

Core views

Inbound tourism is becoming an incremental source of consumption amid weak domestic demand. China received 35 million foreign visitors in 2025, equivalent to 105% of the 2019 level; visitors from Hong Kong, Macao and Taiwan totaled 119 million, equivalent to 110% of the 2019 level. Regional data indicate that growth continued into 2026: international arrivals in Shanghai reached 823,000 in May 2026, with foreign visitors 37% above the May 2019 level. The source-market mix is also changing. The initial recovery in 2025 was led by visitors from Asia, particularly Southeast Asia, while incremental growth in 2026 came increasingly from Europe and North America. Russia recorded the strongest performance, with visitor numbers reaching 10 times the corresponding 2019 level in the first half of 2026 and its share of the listed source markets rising from 2.4% to 15%. The US share declined from 17% to 7%, while the shares of South Korea and Japan also fell, indicating that incremental visitor flows are increasingly coming from emerging source markets, while traditional source markets have yet to regain their former positions. The report attributes the recovery to three drivers: accessibility, affordability and authenticity. In terms of accessibility, Canada and the UK joined the unilateral visa-free program for stays of up to 30 days in February 2026, increasing the number of eligible countries to 50. Another 240-hour visa-free transit program covers 55 countries, allowing travelers to enter through 60 ports in 24 provincial-level regions and stay for up to 10 days. Visa-free foreign arrivals reached 17.8 million in the first half of 2026, accounting for 77.7% of total foreign arrivals and increasing 30.6% year over year. Visitor numbers increased rapidly after Russia received visa-free treatment in September 2025 and after Canada and the UK joined the program in February 2026. The report acknowledges that factors such as flight capacity also contributed, but argues that the speed and magnitude of the response indicate that latent demand had long existed and was previously constrained by visa and travel frictions. Affordability is another advantage China holds over regional tourism destinations. Data cited in the report estimate the average daily spending of visitors in China at approximately US$122 per person, slightly above Thailand's US$110 but below South Korea's US$136 and Japan's US$152. The 2025 Big Mac Index showed a price of US$3.52 in China, below US$5.79 in the US, US$3.84 in South Korea and US$7.99 in Switzerland. Authenticity comes from natural and cultural resources, local lifestyles and unique consumption experiences, with social media converting online interest into visits and spending. The World Economic Forum's Travel and Tourism Development Index ranks China 8th globally, primarily supported by its natural and cultural resources, safety and price competitiveness. However, China still lags some mature tourism markets in tourism services, infrastructure and international openness. Foreign visitors' activities are expanding from traditional sightseeing to shopping, extending the benefits beyond hotels, transportation and dining to domestic retail and brands. The number of overseas visitors applying for departure tax refunds increased 305% year over year in 2025, while sales of tax-refundable goods rose 95.9%. As of May 2026, the number of tax-refund stores had increased to approximately 4 times the level at the end of 2024, reaching 14,000, while the minimum spending threshold for tax refunds was lowered from RMB500 to RMB200 in 2025. The tax-refund “2.0” policy introduced in May 2026 further simplified the process. Starting in July, mandatory physical inspections for purchases below RMB10,000 were replaced by random checks, and applications and invoices could be verified electronically. Following the policy upgrade in April 2025, usage of the “instant refund upon purchase” service increased by nearly 13 times, while related sales and tax-refund amounts both increased by more than 9 times. Consumer electronics, designer toys and Chinese-chic products exemplify the expansion of inbound shopping. In the first eight months of 2025, products from domestic brands such as Huawei and DJI accounted for 38.8% of departure tax-refund transactions in Shenzhen. Shenzhen's tax-refund sales reached RMB740 million, increasing 189% year over year, while the number of transactions increased by nearly 8 times. In July 2026, Shenzhen Customs processed 13,000 tax-refund applications involving RMB170 million in purchases, representing year-over-year increases of 220% and 94.1%, respectively, while Huaqiangbei received nearly 8,000 foreign buyers per day. Characters such as Pop Mart's Labubu attract foreign visitors to China to purchase more complete product lines and limited editions. Chinese-chic brands such as Pane and Songmont also benefit from Chinese cultural aesthetics, with foreign consumers accounting for approximately 35% of sales at Pane's two Shanghai stores. The Adidas Chinese Track Top, designed in Shanghai with traditional frog-button elements, was expanded from the Chinese market to Europe and the US after receiving millions of views on social media, illustrating the spillover potential of local design and cultural elements. Policy objectives have also shifted from removing entry barriers to increasing consumption and service exports. Compared with the 14th Five-Year Plan, which mainly viewed tourism as a supplement to cultural development, the 15th Five-Year Plan explicitly positions tourism as a strategic industry supporting consumption, employment, domestic demand and international exchange, while emphasizing improvements to the complete visitor experience and the attraction of higher-value visitors who stay longer. The plan targets 190 million inbound visits and more than US$150 billion in inbound tourism revenue by 2030, corresponding to average spending of approximately US$790 per visit. The report considers this per-visit spending target relatively modest and believes that the revenue target still relies mainly on continued growth in visitor numbers, although service-quality improvements could generate additional gains by raising per-capita spending. The inbound tourism recovery is already reflected in services trade and the external accounts. China's total services trade reached US$449 billion in January-May 2026, increasing 10.3% year over year. Inbound visitor spending rose from US$94 billion in 2024 to US$131 billion in 2025, while the services trade deficit narrowed from US$212 billion, or 1.1% of GDP, in 2024 to US$199 billion, or 1.0% of GDP, in 2025. According to Ministry of Commerce data, travel services exports reached US$55.2 billion in 2025, increasing 37.3% year over year to approximately 1.5 times the 2019 level. China's overall services exports increased 13.8% to US$507.8 billion, and among the major export categories, travel services grew 49.1%, faster than the 12.8% growth in information technology services. Foreign nationals accounted for 22.8% of the relevant visitors in 2025, up from 16.8% in 2023, while tourism's share of services exports rose to 15% in the first quarter of 2026. Despite rapid growth, tourism's direct contribution to the macroeconomy remains limited. China's tourism exports totaled RMB105.3 billion in the first quarter of 2026, accounting for only 0.3% of nominal GDP, below South Korea's 1.3% and Japan's 1.4%; the share is even higher in more tourism-dependent economies such as Thailand and Singapore. The report therefore concludes that visa liberalization has driven a recovery in visitor volumes, but the next phase will depend more on value capture: expanding the convenience of departure tax refunds, improving digital payments and international bank-card acceptance, increasing multilingual signage and transportation information, and enhancing digital services and overall service standards in lower-tier cities. These measures could extend stays, raise per-capita spending and more fully translate visitor growth into tourism revenue, service exports and broader economic spillovers.

Analysis framework

The report first uses national and Shanghai inbound data to confirm that visitor volumes have exceeded pre-pandemic levels, then analyzes changes in the source-market mix across Europe, North America, Russia and Southeast Asia. It subsequently validates the three drivers of “accessibility, affordability and authenticity” through visitor responses before and after visa-policy changes, cross-country travel costs and tourism competitiveness rankings. It then tracks the transmission from visitor flows to retail consumption through tax refunds, electronics, designer toys and Chinese-chic case studies, and finally combines the two Five-Year Plans, services trade data and comparisons of regional GDP shares to argue that the industry should shift from volume recovery to improving per-capita spending and service quality.

Methodology notes

• Industry/sector analysis frameworkVolume-price decomposition

  Decomposition of visitor numbers and spending per visit

  The report decomposes inbound tourism revenue into the number of visits and average spending per visit. Based on the 2030 targets of 190 million visits, more than US$150 billion in revenue and approximately US$790 in spending per visit, it concludes that the revenue target primarily depends on visitor growth while also assessing incremental per-capita spending generated by service improvements.

• Event games and behavioral financeEvent-driven analysis

  Changes in visitor flows before and after visa-free policies

  The report observes visitor growth after Russia, Canada and the UK received visa-free eligibility, using policy implementation dates and visitor responses to test how removing visa frictions releases latent tourism demand.

• Industry/sector analysis frameworkUpstream, midstream and downstream industry-chain transmission

  Transmission from inbound visitor flows to tourism services, retail consumption and service exports

  The report follows the path from visitor arrivals through accommodation, transportation and dining consumption, tax-refund shopping, domestic brand sales and services trade revenue to explain how the tourism recovery creates broader economic spillovers.

• (Method outside the vocabulary)

  Cross-country comparison of costs and tourism's economic contribution

  The report compares average daily travel costs, price levels and tourism exports as a share of GDP in China with destinations such as Thailand, South Korea and Japan to identify China's price advantage and its gap in value capture.

Key data

• Number of foreign visitors in 202535 millionEquivalent to 105% of the 2019 level
• Number of visitors from Hong Kong, Macao and Taiwan in 2025119 millionEquivalent to 110% of the 2019 level
• International arrivals in Shanghai in May 2026823,000Foreign visitors were 37% above the May 2019 level
• Visa-free foreign arrivals in the first half of 202617.8 millionAccounted for 77.7% of foreign arrivals, up 30.6% year over year
• Growth in Russian visitors10 times the corresponding 2019 levelTheir share in the first half of 2026 rose from 2.4% in the corresponding 2019 period to 15%
• Unilateral visa-free program50 countries, up to 30 daysCanada and the UK joined in February 2026
• 240-hour visa-free transit program55 countriesCovers 60 ports in 24 provincial-level regions, with stays of up to 10 days
• Average daily travel cost in ChinaUS$122 per personUS$110 in Thailand, US$136 in South Korea and US$152 in Japan
• China's Travel and Tourism Development Index ranking8th globallyPrimarily supported by natural and cultural resources, safety and price competitiveness
• Growth in the number of departure tax-refund applicants in 2025Up 305% year over yearSales of tax-refundable goods increased 95.9% during the same period
• Number of tax-refund storesApproximately 14,000As of May 2026, approximately 4 times the level at the end of 2024
• Share of domestic electronics in Shenzhen tax-refund transactions38.8%Brands such as Huawei and DJI, covering the first eight months of 2025
• 2030 inbound tourism targetMore than US$150 billion in revenue and 190 million visitsCorresponding to average spending of approximately US$790 per visit
• Inbound visitor spending in 2025US$131 billionUS$94 billion in 2024
• Services trade deficit in 2025US$199 billion, accounting for 1.0% of GDPUS$212 billion in 2024, accounting for 1.1% of GDP
• Travel services exports in 2025US$55.2 billionUp 37.3% year over year, approximately 1.5 times the 2019 level
• China's tourism exports as a share of GDP0.3%First quarter of 2026; 1.3% in South Korea and 1.4% in Japan
• Foreign travelers as a share of all cross-border travelersEstimated at 12.7% in 20263.9% in 2022

Impact & implications

The report believes that inbound tourism not only provides incremental services consumption during a period of weak domestic demand, but also drives sales of consumer electronics, designer toys and Chinese-chic brands while improving services trade performance through travel services exports. However, its economic contribution remains below that of regional peers, and its future impact will depend on whether more visitor flows can be converted into longer stays, higher per-capita spending and broader linkages across the service sector.

What to watch

• Monitor progress toward the 2030 targets of 190 million inbound visits and more than US$150 billion in tourism revenue.
• Monitor whether visitor growth can translate into higher per-capita spending, longer stays and greater tourism export value.
• Monitor cross-regional mutual recognition of the “instant refund upon purchase” service, digitalization of tax-refund processes and the coverage of tax-refund stores.
• Monitor improvements in digital payments, international bank-card acceptance, multilingual signage and tourism services in lower-tier cities.
• Monitor source-market growth from Europe, North America, Russia and Southeast Asia, as well as the recovery of traditional source markets such as the US, Japan and South Korea.