Idea: Influencing the Chinese tourist wave usage of local and US$

http://www.forimmediaterelease.net/pm/1925.html

http://en.wikipedia.org/wiki/Tourism

Rank ↓ Country ↓ International Tourism Expenditures (2007)
1 Germany $82.9 billion
2 US $76.2 billion
3 UK $72.3 billion
4 France $36.7 billion
5 China $29.8 billion
6 Italy $27.3 billion
7 Japan $26.5 billion
8 Canada $24.8 billion
9 Russia $22.3 billion
10 S Korea $20.9 billion

RH:
1. Here are some unfocused, random thoughts on China outbound tourism.

2. As the above table shows, China in 2007 was already the 5th biggest tourism spender abroad, spending some US$30b. According to an outdated World Tourism Org projection around 2005, China will be the world's biggest tourist spender by 2035, a year that should now be brought forward in view of the economic crisis in the US and EU which is impoverishing the top 4 Western countries while China continues robust GDP growth. As the above table shows, China already outnumbers Japan in outbound tourists and Chinese tourists spend as much, often more than, Japanese tourists, due to many Chinese tourists often being given money and tasked to buy [often luxury goods, a favourite shopping for most Chinese for various reasons] goods for family, relatives, friends and even neighbours resulting in the phenomenon of 'shopping for a group'. The average Chinese tourist spends US$1,000 per trip on shopping alone.

3. All this means that Outbound Tourism can be used as an economic pressure by China, either to favour and build better relations with another country, such as Taiwan [by directing or encouraging Chinese tourists to visit Taiwan] or the opposite, by reducing or discouraging visits, since China does require Exit Visas to leave the country to visit another. Even without exit visas, China can probably influence its outbound tourists. Economic pressure is often better than military pressure and far easier and cheaper, since the Chinese tourists will travel overseas anyway, and spend their monies, so channelling them here or there is extremely feasible and easy, costs nothing. Other countries are unlikely to be able to tit for tat because they cannot control or influence their outbound tourists coming into China. Control does not mean all or nothing. It can be a slight or big reduction in exit visas, or discouragement through higher taxes, levies or fees on all kinds of tourism-related applications or govt services.

4. Chinese tourists seem not to have any credit cards except for the beginning use of the China-issued UnionPay credit and debit card. If so, this could be a problem. For example, if a big proportion of the US$30b [2007 figure] spending overseas are paid for in US$, which is not surprising since many countries accept and even prefer the US$ to their own local currency, then China would need to hold at least several multiples of that proportion in US$ leading to losses if the US$ is devalued or falls. This means that if China can influence its outbound tourists and tourist agencies who pay for the tourist groups' hotel, transportation and even meals, to use local currencies, and not the US$, to pay for products and services, this will greatly reduce China banks and institutions having to keep vast amounts of physical US$.

5. On the other hand, what would be the ramifications if Chinese tourists and tour agencies are encouraged to carry the renminbi abroad and then to either settle their bills in renminbi or exchange them into the local currencies? This would internationalise the renminbi somewhat and make it more of an international currency. The 2007 figure of US$30b is set to increase many times in the next few years, given the huge % increase in outbound Chinese tourists every year.

6. Another way to eliminate the risks of China banks and institutions having to carry huge amounts of physical US$ in view of demand by Chinese travelling overseas, is to issue One-Time credit cards only for use abroad and not valid for use in China. This should be easy to arrange by Chinese banks and institutions, which can guarantee the cards and guarantee repayments to foreign merchants demanding payment. This can be a lucrative service for China banks. A simple way to issue these One-Time credit cards is to require the prospective Chinese tourist to have or put enough money into the bank either in his personal Savings or Fixed Deposit accounts -- Business or Company accounts probably not qualifying for this. He must leave a minimum sum or % until after his overseas bills are settled. Thus, this ensures that all credit card holders are solvent and not depend on credit or owe the bank for his overseas spending. After this condition is met, the bank issues a One-Time credit card with an expiry date of say 1 to 12 months, depending on how long the particular trip is and also, how often he travels abroad. Longer expiry dates would require better financial standing and maybe, a higher fee. Having a credit card is more convenient since most tourist facilities in most countries accept credit cards. Also, since all the tourist spending is thus on credit, only when the merchants forward their claims for payment would the bank then pay out, in the merchants' local currency, thereby eliminating the need to carry or hold US$. For prudence, banks would only allow total or almost total withdrawal of the initial Savings and Fixed Deposits by the tourist only after all the bills have been settled, plus a margin of a month or so for safety. Thus, a bank issuing such One-Time credit cards will get more depositors opening accounts, so good for business -- at least, for those banks allowed by the govt to issue these credit cards. With computers so advanced, it is possible to set different maximum spending limits for each card or each category of card [which could be proportionate to the expiry date]. Lost or stolen cards would be subject to much the same terms, penalties and safeguards as say, VISA cards.

7. Another way to encourage more buying of non-US local currencies and therefore to discourage buying of US$, is to levy a small fee on top of the usual exchange rate commission. In other words, if a Chinese intending to visit Thailand wants to exchange his renminbi for US$ instead of Thai baht, he pays slightly more. This should increase the China banks holdings of most other currencies and reduce its need to hold US$, thereby reducing risk of losses should the US$ devalues or falls.

8. The sum of US$30b in 2007 is big enough to look into. It will get bigger and bigger and so deserves a thorough look and review.

--
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THE MOST COMPLETE RUBBISHING OF LEEconomics EVER:

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[ALSO AT THE ABOVE BLOG, LIE KUAN YEW's LIES, CORRUPTION, WRONGFUL JAILING, TORTURE AND BEATING TO DEATH OF INNOCENT POLITICAL PRISONERS LIKE MR CHAN HOCK HUA]

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ALSO AT:

http://i-came-i-saw-i-wrote-it.blogspot.com/2007/03/filmmaker-martyn-see-interviews-robert.html

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