Chinese who come to the US on a business visas often add leisure and tourist activities to the trip. Photo: AFP/Getty Images
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https://scmp.com/news/china/diplomacy/article/3024627/another-trade-war-toll-number-mainland-chinese-business Diplomacy
Another trade war toll: number of mainland Chinese business travellers to US drops
- The decline in business visits follows a drop in tourist arrivals from China in 2018, the first in 15 years
- ‘Many Chinese executives wanted to invest in the US, but they increasingly stay away from US because they don’t think they are welcome here,’ analyst says
The number of business travellers from the Chinese mainland to the US has dropped, data shows. Photo: Getty Images/AFP
Business trips to the US by mainland Chinese appear on track to decline in 2019 after years of growth, as escalating trade tensions bite deeper into China’s economy and worsen business ties between the world’s top two economies.
The arrivals by mainland Chinese business travellers dropped 1.9 per cent year on year in the first six months of 2019, the first such downturn since 2011, according to US Commerce Department data.
The decline comes amid a trade war that started in July 2018 and sharply lower investment in the US by Chinese companies. Investment has fallen by nearly 90 per cent since its peak in 2016, including a sharp drop in 2018 and early 2019, with more companies reporting lower revenues and thinner profit margins than a year ago, according to the results of an annual membership survey by the China General Chamber of Commerce-USA, announced in June.
The drop in business visits to the US by mainland Chinese, which had grown 40 per cent since 2011 to nearly 400,000 in 2018, also follows a plunge in tourist arrivals from China in 2018, the first drop in 15 years.
“Many of those Chinese who visit US on a business visa tend to combine business with leisure,” said Liu Peng, a professor of Asian hospitality management at Cornell University’s School of Hotel Administration. “They shop and even check out a few schools for their children on business trips. So the trade war does have an impact on the decline of business visitors. [The trade war] affects their business needs and their income back home as China’s economy is worsened by the trade war.”
The decline in business visits was expected to continue in the second half of the year, experts said, after tension between Washington and Beijing reached new highs on Friday with both sides slapping more tariffs on each other’s exports.
Fred Teng, president of the Washington-based America China Public Affairs Institute, said Trump’s tweet on Friday telling American companies to look for alternatives to manufacturing in China sent a “strong signal” to Chinese businessmen and women.
“Many Chinese executives wanted to invest in the US, but they increasingly stay away from US because they don’t think they are welcome here,” Teng said.
He added that Canada’s detention of Meng Wanzhou, Huawei’s chief financial officer, on December 1 at the request of the US also had a chilling effect. If a third-party country treated executives like that under US pressure, Teng said, the risk of visiting the US could be even higher.
The anticipated first annual drop in business visitors in eight years suggests that the trade war has weakened the business ties between the two countries, as well as dampened the growth of America’s US$1.6 trillion tourism industry and its higher education sector, both of which depend heavily on Chinese.
There were 1.47 million visits to the US by mainland Chinese in the first half of 2019, with tourism accounting for the vast majority. Although business visits were about 14 per cent of the total, they can serve as a broader barometer of US-China relations.
The decline in business trips was in line with the shrinking cross-border investment between China and the US. It plunged 18 per cent to US$13 billion in the first six months of 2019, the lowest level since the first half of 2014, according to a report in early August by the Rhodium Group and the National Committee on US-China Relations.
The drop in Chinese business visits also came amid an overall decline in mainland Chinese travelling to the US. Total visits by mainlanders to the US dropped by 2.8 per cent year-on-year to 1.47 million by the end of June, according to data released this month by the National Travel and Tourism Office (NTTO), an arm of the Commerce Department.
The decline followed a nearly 6 per cent year on year drop in 2018, the first annual downward shift in mainland travellers since 2003. The 2018 decline was caused by the shrinking number of tourists (down 9.6 per cent year on year) with both business and students visits increasing, according to the NTTO. Its data tracks the number of international visitors on three visa types: business, pleasure and student.
Mainlanders on student visas was the only group that saw a year-on-year increase in the first half of 2019 – by 3.4 per cent. But the momentum appears to have cooled after yearly growth of 6.3 per cent in 2018.