Tourism unlikely to be hurt by slump in ChinaKorea’s tourism sector has little to fear from China’s economic slump, Ahn Ki-tae, an economist at NH Investment & Securities, says.
After its rapid economic growth in 1980s, Japan experienced the “bubble economy” in 1990s with excessive supplies that brought huge debts to companies in the manufacturing industry. However, at the same time, the number of tourists gradually increased regardless of the business’s recession.
The current situation in China is similar to that of Japan in the past.
China has had a slump in its manufacturing business and if it continues, the rate of economic growth could be severely hit.
“Although China’s manufacturing industry has slowed, the tourist industry is a different story,” said Ahn. “Korea’s tourist and cosmetic businesses will still be in constant demand at least for the next three to four years.”
Referring to Japan in 1990s, when the nation’s tourism and cosmetic industry still thrived while suffering from its aging population, Ahn said the size of middle class consumers and their consumption patterns have a real influence over the tourist businesses rather than the economic condition.
“Japan had around 100 million people in middle class and their desire to go on overseas trips was constantly growing,” said Ahn.
“Using purchasing power parity that compares living standards of different countries, China’s per capita income is estimated to be $13,800, which is quite similar to Japan and Korea in the similar situation.”
Ahn predicts that overseas trips from China will remain unaffected although its stock markets have been gradually weakening.
?“A considerable amount of those who purchased the shares before the markets started to plunge have high-school diplomas or lower.” He added, “if earnings are proportionate to educational degrees, the late-comers in market who had lost a lot could be low-income families who can’t even afford to go on overseas trips.”
Some worry the yuan devaluation may be another problem, but Ahn said, “Regarding their corporates with one trillion worth of foreign loans, it is highly unlikely that the People’s Bank of China will devalue its currency.”
BY LEE SEUNG-HO [firstname.lastname@example.org]
with the Korea JoongAng Daily
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