GBTA announces the results of its second GBTA BTI™ Outlook – China report, a semi-annual analysis of one of the largest business travel markets in the world. The report, sponsored by Visa, includes the GBTA BTI™, an index of business travel spending that distills market performance over a period of time.
China’s economy has slowed in lockstep with Europe’s woes. GBTA forecasts that China’s GDP will grow by only 7.8% in 2012, down from 9.2% GDP growth in 2011
Chinese authorities have managed their economy through the global slowdown, with the economy being purposely rebalanced toward domestic growth
Chinese business travel will continue to show strong growth over the next 18 months, with total business travel spending forecast to grow by 12.5% in 2012 to $195 billion, followed by another 14.7% in 2013
Domestic business travel will recover sooner and more strongly than international outbound (IOB). In 2012 domestic travel spend will grow by 12.8%. It is expected that in 2013 domestic spend will grow 14.6% reaching $213
Growth in IOB is forecast to slow considerably over 2012 reaching only 5.5% growth, compared to 12% growth in 2011. In 2013, IOB is expected to grow 17.5% reaching $10 billion USD
Welf J. Ebeling, regional director, GBTA Asia remarked: “The slowdown in economic growth, attributable to the worsening situation in Europe, has been of concern to the Chinese population. The good news, however, is that the Chinese government is responding. Fiscal intervention in 2012 and 2013, as well as stronger domestic demand, should help domestic travel spending rise by over 12% in 2012. Looking ahead, we are also confident that this will translate to higher growth in overall business travel spend in 2013.”
Economic stimulus and domestic business travel
China has found that in spite of its strong growth levels it has not been isolated from the current global slowdown. This has been reflected by lower than expected GDP growth in 2012, and consequently a revised forecast for lower business travel spend. To address these setbacks the Chinese government has purposely rebalanced the economy towards domestic growth over the past few years. This has been done through the introduction of fiscal stimulus, with an increase in infrastructure spending, which includes the Ministry of Railway increasing investment projects by 16%, for example.
Domestic business travel has disproportionately benefited from these policies and in 2012 GBTA expects growth of 12.8% for domestic business travel. This level of growth is not reflected in IOB travel, for which the GBTA has forecast 5% growth this year. This slowdown in growth can be attributed in part to a significantly lower level of demand for Chinese exports, particularly in the U.S. and Europe. (Exports represent nearly 30% of Chinese GDP.)