Foreign Investment in Outbound Travel Services in China

Foreign investment in outbound travel services in China is now in a pilot stage following significant easing of Chinese travel restrictions.

by | Dec 5, 2022 | Policy & News

On October 8th, 2022, the State Council issued a notice on the temporary adjustment to laws pertaining to foreign investment in outbound travel services in China. The amendments to the Regulations on Travel Agency allow qualified foreign-invested enterprises registered in Shanghai and Chongqing to provide travel services to Chinese nationals outside of China, including Hong Kong and Macao, but excluding Taiwan.

Article 23 of the Regulations on Travel Agency currently prohibits foreign-invested travel agencies nationwide from engaging in travel services for Chinese nations traveling abroad. The amendments direct the relevant local departments of the State Council in Shanghai and Chongqing to formulate the rules and relevant administrative measures in a manner comparable to a comprehensive pilot program allowing qualified foreign-invested enterprises in the area to engage in outbound travel services in China.

The amendment specifies the pilot program applies to qualified foreign-invested travel agencies without specifying the criteria which need to be met.  

Notably, the temporary adjustments come at a time when authorities have made considerable changes to the epidemic prevention and control policies pertaining to inbound travel to China in line with the dynamic zero-COVID policy which has sparked renewed optimism amongst Chinese tourists and travel agencies in China.

The temporary adjustments are effective until April 8th, 2024.

Opportunities for Outbound Travel Services in China

In the years leading up to the outbreak of Covid-19, outbound Chinese tourism had seen rapid growth reaching 155 million travelers in 2019. However, this number dropped significantly in 2020 to roughly 20.3 million and an estimated 25.6 million in 2021. This dramatic drop in outbound travel caused the once USD $255 billion industry to all but vanish for the time being.

Experts credit the significant drop in overseas travel in part due to the cancelation of many scheduled flights to and from China, driving air transportation prices up significantly, and the ongoing travel restrictions imposed on passengers entering China from abroad.

However, Chinese tourists have demonstrated an eagerness to resume travel abroad in the absence of strict travel restrictions. Following an announcement by Hong Kong SAR authorities on the new 0 + 3 policy for inbound passengers, referring to 0 days central quarantine and 3 days home quarantine, reported a 400% increase in online booking compared to the weekend prior.

Likewise, when Macau reported no new local breakouts and dropped quarantine requirements for tourists from low-risk areas, the number of tourists to Macao recovered to 50 percent of pre-pandemic levels, indicating that quarantine requirements are a key factor in the resumption of international travel to and from China.

Notable Policy Changes for International Travel to China

China maintains a dynamic zero-COVID policy the goal of which, contrary to the name, does not aim to have zero infection, but instead controlling the spread of the virus at the lowest possible cost in the shortest possible time, according to Chinese officials. This includes making timely adjustments according to the changes in the virus and the situation on the ground.

In an October 12th announcement, the State Council stated that recent adjustments to epidemic prevention and control measures emphasize a scientific approach to minimize the impact of the epidemic on economic and social development goals. With domestic and international travel being a critical aspect of the zero-COVID policy, the announcement suggests that officials are looking for ways to minimize travel restrictions for both domestic and international travel.

Quarantine requirements

On November 11th, the National Health Commission announced a reduction in the quarantine requirements for travelers entering China from overseas. The quarantine requirement for travelers entering China has been reduced to “5 + 3”, which corresponds to 5 days of central quarantine and 3 days at home quarantine, down from “7 + 3”. The current quarantine requirements are a significant departure from policies earlier this year – which required a minimum of 14 days of central quarantine and up to 28 days in certain areas.

International Flight Routes

In the same announcement, officials also announced that they would be doing away with the “circuit breaker” policy which would temporarily suspend a specific flight route from operating based on the number of passengers who test positive for the coronavirus upon entry into China.  Flight routes could be canceled for up to two weeks if airlines failed to prevent the spread of infections onboard their flights.

Numerous reports in October also state that China’s three major airlines which include Air China, China Southern Airlines, and China Eastern Airlines will resume numerous international flights between high-profile destinations starting this year.

PCR Testing Requirements Prior to Entering China

Previously, all travelers planning to enter China must obtain a green Health Declaration Certificate (HDC) code for foreign nationals or a green Health Code for Chinese nationals from the Chinese embassy in the country of departure and transit countries. The previous policy required two negative PCR tests, the first of which must be sampled within 48 hours of departure and the second within 24 hours of departure.

Chinese embassies in numerous countries announced on November 11th that the PCR test requirements have been adjusted down to 1 test sampled within 48 hours of departure further reducing the cost and overall burden on inbound travelers to China.

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