Biggest US Export to China? Spending by Chinese Tourists

Biggest US Export to China? Spending by Chinese Tourists

Timothy Taylor 08/10/2018 6

International tourism is counted in the official economic statistics as an export industry. We don't always think about it that way. But when, say, Chinese tourists in the US purchase goods and services, then Chinese consumers are buying goods and services produced in the United States--which is what "exports" means.

Thus, I found it interesting that US exports of services to Chinese tourists in the US is the US industry with the largest exports to China. Here are some facts as compiled by the US Travel Association:

  • "In 2016, 3.0 million Chinese travelers visited the U.S., an increase of 15 percent from 2015." 
  • "China was the third-largest overseas inbound travel market to the U.S. in 2016." Apparently, 12% of all overseas tourist visits to the US originate from the United Kingdom, 9% from Japan, and 8% from China. 
  • "Travel exports to China (ie: spending by Chinese visitors and students in the U.S., and on U.S. airlines) reached $33.2 billion in 2016, significantly higher than any other country. This includes $12.5 billion in education-related spending by Chinese students in the U.S."
  • "Average spending per Chinese visitor was $6,900 in 2016, the highest of all international visitors." If I'm reading the footnotes correctly, this number doesn't include spending on education." 
  • "Travel is the largest U.S. industry export to China, accounting for nearly 20 percent of all exports of U.S. goods and services to China."

As the trade conflicts between the US and China continue, what is the likelihood that China might retaliate by making it harder for Chinese tourists to reach the US? After all, China has used limitations on tourism to put pressure on South Korea, Taiwan, and others.

At least one commenter in the travel industry thinks it unlikely, for several reasons. Many Chinese firms are involved in the Chinese tourism industry, so limiting tourism would hurt them, too. China has been choosing its tariff retaliation targets with some eye to hitting states that supported the election of President Trump, but limits on Chinese tourism to the US would have the biggest effects in California, New York, Illinois, and Massachusetts--none of them Trump strongholds. Finally, cutting Chinese travel to the US would also affect a lot of Chinese firms operating in the US and world markets, as well as Chinese students at US colleges and universities, which does not appear to be a goal of China's government.

One irony here is that some of President Trump's proposals to limit immigration would have the effect of reducing foreign students studying in the US--and of the million or so foreign students in the US, about one-third are from China.  Given that these foreign students are a US export industry, consuming goods and services (especially education services) produced in the United States, such a step would have the opposite effect of the Trump administration desire for higher US exports to China and other countries.

A version of this article first appeared on Conversable Economist

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  • Kenneth Spel

    It’s too early to tell if fewer Chinese tourists are coming to the U.S.

  • Jamie Ozi Bolstridge

    A downturn in Chinese tourism could certainly hurt the US economy.

  • Sam Paulson

    The bigger impact will be Beijing’s pushing of a patriotic line not to go to the U.S

  • Lee Ettelliev

    I expect that kind of nationalist sentiment to rise as the trade war ramps up

  • Eric Iverson

    Curious to know what kind of impact this may have.....

  • Scott Andrews

    Both countries need each other. The trade war is damaging both America and China.

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Timothy Taylor

Global Economy Guru

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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