China's Economy Shifts Toward Domestic Growth vs. Exports

Posted by Dynamic Language on Mar 3, 2017 Mar 3, 2017

china's economyChina’s government has mandated an increase in service industries as a percentage of GDP as part of an effort to transform its China's economy toward a domestic-growth orientation versus an export-oriented manufacturing one.

Today, there are a variety of projects at various stages of development to advance key areas within the zone and aiding development of China’s coastal areas in particular. A Hong Kong-Zhuhai-Macau bridge and tunnel project is still under construction but nearly complete, and will link the regions more closely and likely invite even more visitors.

In southern China, Macau has developed a huge service industry based on gaming and is known as the “Las Vegas of China,” but it is morphing into a general entertainment center, which continues to grow. 

Hengqin Island in Zhuhai illustrates the improvements in infrastructure seen in the past few decades in the region. Zhuhai became a Special Economic Zone (SEZ) in the late 1970s with the government’s policy that opened a “window” to Macau and the outside world. The SEZs offered foreign investors special incentives, including more favorable tax rates and less red tape. Zhuhai’s SEZ status meant it would receive a boost in infrastructure spending.

Travel In and Out of China

During the National Day holiday in October 2016 (also referred to as “Golden Week”) more than 590 million domestic trips were made nationwide in China, which was up nearly 13% from the same time in 2015. Total tourism spending reached RMB 421 billion, up 14% from the previous year, and the Chinese spent a record amount of money on shopping and food during the holiday week, too. The Chinese aren’t only traveling domestically during their holidays, either. Morocco was cited as a hot destination for Chinese tourists during Golden Week last year, and this year’s Lunar New Year saw Chinese travelers flock to other countries in Asia as well as to Europe and North America.

Since 2004, China has seen double-digit growth in expenditure every year, leading the world in outbound travel.

High-speed train, Guiyang, China station

High-speed train, Guiyang, China station

Decades ago, leisure travel was unheard of for most Chinese citizens. Today, many Chinese consumers have more disposable income for travel and leisure. In 2001, just 3% of China’s population was considered middle income, but by 2011, that figure rose to 18% of the population. In absolute terms, that means more than 200 million people crossed the middle-income threshold. 

According to an Economist Intelligence Unit report, by 2030, 35% of China’s population (representing around 480 million consumers) is expected to meet its definitions of upper middle-income and high-income, with upper middle-income consumers having a disposable income of RMB 67,000–200,000 (US$10,800–32,100) and high-income consumers having a disposable income above RMB 200,000 (US$32,100).

China tourists are soon to be greeted with fast, reliable bullet trains, gleaming shopping malls and impressive theaters, sports arenas and other attractions. 

This creates opportunities for businesses in the tourism and travel sectors. As gateways open, and incomes rise in the region, there is an anticipated influx of tourism as well as the local middle class enjoying more extravagant activities and travel opportunities. Companies that are looking to take advantage of this boost in Chinese tourism may consider localizing their website and booking engine, as users reaching it will not solely be interested in reading its content, but will be enticed to plan their travel using their services.

translated health card