The appreciation of the Chinese renminbi, or the yuan, should have a positive impact on Chinese nationals traveling or studying overseas. However, the impact will be small, and not immediately noticeable.
On July 21, the People's Bank of China, the nation's central bank, unexpectedly announced that the renminbi would no longer be pegged to the US dollar. Initially it will be traded at a rate of 8.11 yuan per dollar, down from 8.28.
"The rate adjustment is of course good news for outbound tourists and overseas students. As it is more valuable in overseas markets, Chinese travelers and students will get more foreign goods for the same amount of renminbi," said Wei Xiao'an, a researcher with the Travel Research Institute attached to the Chinese Academy of Social Sciences. He added that considering the 2 per cent adjustment is rather slight, the market response will be neither quick nor strong.
Chen Xiaobing, general manger of Beijing CAISSA International Travel Service Co Ltd, whose key business is European package tours, told China Daily that although the renminbi revaluation could lead to lower outbound travel costs, overall tourism costs will not decrease in the near future.
In general, overseas tour costs include airfares, hospitality and local shopping. According to Chen: "Destination expenditure will be lowered slightly, but this will be offset by the continuing rise in airfares, caused by soaring oil prices."
Meanwhile, Wei pointed out that the lifting of the renminbi's peg to the US dollar resulted in closer relations with "a basket" of other currencies, increasing the risk that the impact of the yuan's rate adjustment may be impacted upon by the diversifying fluctuations of various currencies.
Chen estimated that the positive impact on overseas travel was unlikely to be seen in the next few months. The first wave is expected during the seven-day National Day holiday, and the subsequent trend is expected to be stable development.
According to a survey conducted by www.chinasurvey.com.cn, which sampled over 1,000 Chinese in nine cities, 56.3 per cent of the respondents said that the yuan revaluation is acceptable and they plan to travel and consume overseas.
Hong Kong, a popular overseas tour destination for mainland Chinese, will benefit from the renminbi appreciation, shopkeepers, hotels and other tourism-related businesses believed.
"Definitely, it will stimulate the Hong Kong retail market," said Bankee Kwan, chairman of the Retail Management Association, a trade group representing the city's shopkeepers. "More mainland travelers will come to Hong Kong to spend money, because it's cheaper than before."
Chen said the renminbi appreciation would affect inbound travel more quickly and more directly than outbound travel. He added that foreigners are more sensitive to currency fluctuations, a good example being US tourists.
"US visitors to European Union countries have witnessed a sharp drop over almost two years, due to the strong euro currency and sluggish US dollar. A similar phenomenon may occur on the Chinese mainland," pointed out Chen.
Nevertheless, this may well only be a short-term occurrence. As China's travel resources, in terms of facilities, services and site development, become more mature and optimized, more overseas consumers will turn their eyes to the market, nullifying any negative currency shifts.
Wei shared Chen's views that the yuan appreciation would not influence China's tourism industry too much. He added that considering Chinese people's ever-increasing income and the rich travel resources of the nation, the future for outbound and inbound travel is promising.
Statistics from China National Travel Administration (CNTA) indicates that 20.22 million Chinese people traveled abroad in 2003, surpassing Japan and becoming one of the world's top 10 countries in terms of overseas tourism consumption. China's outbound travelers reached 29 million last year, a 43 per cent increase from a year earlier.
Overseas students are regarded as another group of beneficiaries of the renminbi revaluation. However, the situation is similar to that in the tourism sector: steady growth is expected rather than a short-term boom.
Wei said that a decision on overseas study was usually made after a long-term and thoughtful consideration process. Family discussions usually revolved mostly around the quality of education and its influence on the student's future.
"Most families in China today only have one child, so they may not be too particular about expenditure, especially if the adjustment is only 2 per cent," said Wei.
A marketing manager of JJL Group, one of China's leading private overseas study consulting companies, who asked to remain anonymous, said there is no evidence that overseas study demands have surged rapidly since July 21.
"Figures of people asking for consulting services and website page viewers are both yet to witness an increase," said the manager.
(Xinhua News Agency July 29, 2005)
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