Hong Kong, Guangdong and Macau join forces to attract tourists to bolster Greater Bay Area as US-China trade war intensifies
Tourism sector’s recovery in Pearl River Delta region under threat from falling yuan and economic dispute between superpowers
Fearing the effects of a falling yuan and an intensifying US-China trade war, Hong Kong’s tourist chief has unveiled plans to team up with counterparts in Guangdong and Macau to attract overseas visitors to the region.
Hong Kong Tourism Board chairman Peter Lam Kin-ngok warned the sector’s recent recovery could be short-lived as mainland Chinese shoppers watch the yuan in their pockets depreciate, causing a knock-on effect on air tickets, accommodation and transport.
To spur growth, he proposed Hong Kong puts aside competition with mainland China and joins forces with tourism authorities in Guangdong and Macau to promote the Greater Bay Area to overseas visitors. As a key part of the promotion, Lam added, a delegation led by Chief Executive Carrie Lam Cheng Yuet-ngor would visit Japan in November.
The Greater Bay Area initiative is a central government plan to integrate Hong Kong, Macau and nine Guangdong cities into an economic and technology hub to rival similar bay areas in the United States. China would roll out the development blueprint soon.
The city’s tourism sector showed strong growth in June, when 12.8 per cent more tourists – 4.74 million – visited Hong Kong, lifted by 3.63 million mainland Chinese visitors, an increase of 17.3 per cent. Hong Kong relies heavily on tourists from across the border, who account for three out of every four visitors.
Peter Lam said however that tourist arrival numbers in June had already shown “some decline”.
“If the yuan situation and the trade war drag on, the city’s tourism will be affected,” he said. “We hope the new infrastructure – the bridge and high-speed rail services – [will help us] encourage visitors to stay longer in the city and make excursions to neighbouring areas across the border.”
Tourist arrivals jumped 10.1 per cent to 30.6 million in the first half of 2018. The number of arrivals from mainland China grew 13.4 per cent to 23.68 million year on year. The board estimated at the beginning of the year that this year’s growth in tourist arrivals would be 3.6 per cent.
The yuan weakened 8.6 per cent to 86.85 per HK$100 on Tuesday from April 2 while depreciating at the same magnitude against the US dollar to 6.81 per US$1, according to the China Foreign Exchange Trade System.
Some economists predict the mainland Chinese currency will weaken further amid the unfolding trade spat, which saw the US levy and propose punitive tariffs on US$750 billion worth of Chinese goods in the past few months.
Brokerage CLSA tipped the Chinese currency to hit 7 yuan per US$1 at the end of this year.
“By the end of the third quarter or early fourth quarter, we will begin to see the impact of yuan and the trade war,” Tourism Board executive director Anthony Lau Chun-hon said.
As a short-term measure, the board has negotiated with airlines in the region for discounted packages to bring in more tourists from South Korea, Japan, Taiwan, Malaysia, the Philippines, Singapore and Thailand.
For example, a return ticket to Hong Kong from Seoul on premium carrier Cathay Pacific Airways will be offered at HK$2,000 to South Korean visitors, who can use their boarding pass to redeem discounts for hotel meals and entrance fees to tourist spots in Hong Kong.
Lau said the growth in supply of air seats in Hong Kong, at about 2 to 3 per cent this year, lagged behind the roughly 5 per cent increase for cities in the region, which limited growth in tourist arrivals in the second half of 2018.
Ocean Park’s chief executive Matthias Li Sing-chung said more mainland Chinese tourists visited the theme park in the first half of this year.
“I think they are reflecting the market trend. We are very happy,” Li said, but added numbers might drop if the yuan weakened.
“It depends on the attractiveness of the place. China’s economy is flourishing and there is always a demand for tourism. So I am not worried,” Li said.
Additional reporting by Kanis Leung.