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China eyes tourism infrastructure upgrades to spur economy

03/07/2017| 8:13:58 PM|

China plans to spend about RMB 2 trillion on the tourism sector by 2020, which will contribute more than 12% of GDP.

China plans to boost its tourism sector by upgrading infrastructure and giving the public easier access to travel information, reported state news agency Xinhua.

The China National Tourism Administration unveiled a development guideline for the tourism industry during the 2016-2020 period. It echoes the country's national strategy to spur the service sector. The document also outlines plans to build a more integrated information sharing system and provide visitors higher-quality services.

China's tourism revenue totaled about RMB 4.69 trillion (USD 689.7 billion) in 2016, up 13.6% YoY. Domestic tourists made 4.44 billion trips last year, an increase of 11%, official data showed.

Tourism plays a key part in the world's second-largest economy as the country moves to build an economy driven by the service sector and consumer spending rather than trade and investment. By 2020, the country will spend about RMB 2 trillion on the tourism sector, which will contribute more than 12% of GDP, according to the plan.

China spent more than USD 10.8 trillion on infrastructure from 2006 to 2015, according to Bloomberg calculations. Outlays for roads, airports, ports, railways, and the like rose 17.4% last year, far outpacing the country’s 6.7% expansion in gross domestic product. 

Beijing will invest RMB 3.5 trillion yuan in railways by 2020, which among other things will pay for a more than 50% expansion of the country’s high-speed network, the State Council Information Office said in late December. The central government also has pledged RMB 3.4 trillion for rural water, road, electricity, and communication projects through 2020, Xinhua reported on February 17.

The relentless spending on new construction is weighing on China's public balance sheets. Total debt was about 260% of GDP in 2016, up from about 160% in 2008, according to calculations by Bloomberg Intelligence.

The country has begun experimenting with public-private partnerships (PPPs) in which private investors supply a large portion of the financing for a project in exchange for a promised stream of payments. China’s National Development and Reform Commission announced PPPs worth RMB 4.23 trillion from May 2015 to October 2016, Xinhua reported.

Some say China is making the same mistake as Japan, which spent trillions of yen on infrastructure projects that did little to reverse economic stagnation after the collapse of the 1980s property bubble. 

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