Boom in Tourists Helping Stabilize China-Vietnam Relations

China has emerged as the top single-country source of tourism for Vietnam over the past year, a status that could help broader relations hurt by a maritime dispute and historical distrust. 

The number of Chinese tourists to the neighboring Southeast Asian country reached 250,000 in January, leading other countries with about a quarter of the month’s total. The headcount from China marks a 68 percent increase over January 2016, according to Vietnamese government figures cited by the state media. 

Chinese tourists have reshaped the economies of Hong Kong and Taiwan over the past decade, bringing those places closer to Beijing after periods of troubled relations. 

“There are some underlying tensions over the East Sea or the South China Sea, but nevertheless Vietnam is a place the Chinese feel comfortable going,” said Frederick Burke, partner in the multinational law firm Baker & McKenzie in Ho Chi Minh City. “It’s accessible. It’s nearby. It’s culturally similar but it’s different so it’s interesting. It’s not expensive and they do cater to the Chinese.” 

Overcoming tensions 

The upswing in Chinese arrivals caught Vietnam’s attention last year as about 2.2 million reached the country from January through October. Their numbers fell in 2014 after Beijing let a state oil firm position a rig in the disputed South China Sea, touching off deadly anti-Chinese riots in Vietnam.  

Beijing and Hanoi bitterly dispute sovereignty over much of the sea, including two chains of tiny islets. 

But a sustained influx of tourism could ease people-to-people relations affected by centuries of political rivalry and a border war in 1979 as well as the maritime dispute, analysts say. 

The rise in tourism was a bright spot in Sino-Vietnamese business ties toward the end of 2016, said Hoang Viet Phuong, head of institutional research and an investment advisor at SSI Securities Services in Hanoi. 

“There is a desire to move away from being a manufacturing hub,” said Louie Nguyen, editor and founder of the news website VietnamAdvisors. “You can see that in the increase in the startup initiatives in terms of tech startups. Even in the film business, the latest King Kong was made in Vietnam. So there (are) various initiatives to move away from manufacturing. Tourism is one of them.” 

China is now Vietnam’s top source of tourism, according to the Chinese state-run Xinhua News Agency. Although the Southeast Asian country depends largely on export manufacturing, one in eight jobs is in hospitality, Burke said. Tourism accounted for 6.6 percent of the GDP last year. 

Initial boost 

A land border crossing and short flights from southern Chinese cities gave tourism an initial boost.  

The Vietnamese border province of Quang Ninh, a popular holiday-making spot, was set in January to let Chinese group tourists stay three days visa free. Chinese are partial to coastal scenery, shopping and buffet meals, according to local media. 

“We’ve gone to Thailand and Maldives over the past two years, and then we saw some introductory material and thought (Vietnam) would be a bit better, more elemental,” said Ma Wensheng, 48, a Beijing tourist who just spent three days in South Vietnam with family.  

He said that while he encountered no anti-Chinese sentiment, not all was perfect. 

“The disadvantage is perhaps that tourist development lacks that of Thailand and the Maldives,” Ma said. “Some of the tourist infrastructure isn’t quite as friendly and in some places it’s incomplete. Its advantage is that prices are lower there compared to in the Maldives and so on.” 

The number of Chinese tour groups to Malaysia, Singapore and Thailand have largely held steady since those three countries became the first overseas markets in 2003. But the disappearance of Malaysia Airlines MH370 in March 2014 hurt arrivals to Malaysia and Singapore had reported a drop of 24 percent between 2013 and 2014 before it sought to make permits easier for family travel.  

Thailand has not seen any long-term decline in arrivals from China, where the number of outbound tourists grew by 20 percent in 2015. 

Hong Kong and Taiwan 

Large numbers of Chinese travelers have shaped other parts of Asia, as well. For example, arrivals from China brought a boom to the service sector in Hong Kong after a relaxation of rules in 2003. Hong Kong received 45.8 million mainland Chinese visitors in 2015. 

Since 2008, Chinese travelers have lifted the service sector in parts of Taiwan near tourist attractions. Their headcount peaked at nearly 3.5 million in 2015. 

China does not appear to be pushing tourism in Vietnam for strategic gain, Burke said, but eventually it could ask Chinese travel agencies to scale back if relations sour. 

Taiwanese officials have reported declines of 30 to 40 percent in group travel from China since the May inauguration of a president who opposes Beijing’s goal of unifying the two sides politically. The decline has hurt hotels and tour bus operators. 

Visits from mainland China to Hong Kong dropped 3 percent in 2015, the year after the anti-Beijing Umbrella Movement protests. 

Vietnam understands the risk of a pullback, said Jonathan Spangler, director of the Taipei-based South China Sea Think Tank.  

“Beijing has been known to limit outbound tourism as a political tool, but the Vietnamese government understands that such risks are only a small part of its economic relations with China and broader diplomatic and political interests,” he said.

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