The Global Business Travel Association (GBTA) issued a new report that shows China is expected to become the largest market for business travel in the world by 2015. The annual GBTA BTI Outlook-China report finds that total business travel spending in the country increased by an average 15.5 percent per year from 2000 to 2012. Business travel spending is forecast to increase by another 15.1 percent in 2013 to $226 billion, while the projected growth of 16.9 percent in 2014 is more than twice the rate of the U.S.
After expanding by 7.8 percent in 2012, China’s economy should continue to usher the world out of its economic slowdown. GBTA forecasts that China’s GDP will increase by 8.3 percent in 2013, with growth predicted to be just below 9 percent in 2014. The GBTA report says Chinese authorities remain committed to rebalancing the economy to stimulate domestic investment and consumer demand.
Meanwhile, China domestic business travel will outperform international outbound business travel. In 2013, domestic travel spend should grow by 15.2 percent, according to GBTA, with an increase of 16.9 percent in 2014. Growth in international outbound business travel is forecast to pick up slightly following a marked slowdown in 2011 and 2012. In 2013, GBTA expects international outbound business travel to grow 13.3 percent, followed by an increase of 16.3 percent in 2014
“Although economic growth has been moderated by ongoing global uncertainty, the Chinese economy is regaining its momentum,” said Welf Ebeling, vice president-operations for GBTA Asia. “A range of government policy initiatives, which began last year, should deliver improved economic performance in 2013 and 2014. As a result, we are confident that stronger domestic demand will spur renewed growth in business travel spending. At the forecasted growth rates, China is likely to become the largest business travel market in the world as early as 2015.”
GBTA said the outlook for business travel in China is influenced by the country’s sustained economic growth. The Chinese economy managed a soft landing in 2012 despite the drag on its export sector caused by the protracted slowdown in Europe and the U.S. Export growth remains vital to China’s economic prospects, and neighboring countries, such as Malaysia, Taiwan, Singapore and Vietnam, are taking up part of the shortfall. To counteract diminished international trade, prudent monetary and fiscal policies are designed to stimulate domestic consumer demand. With China’s formal transfer of leadership completed in March 2013, President Xi Jinping has confirmed the government will continue to pursue qualitative growth by rebalancing the economy.
China’s sustained, if slightly weaker, GDP growth means the outlook for business travel is still very positive, according to GBTA. The combination of an expected recovery in global markets and rising domestic consumption should yield further positivity. GBTA forecasts a 15.1 percent increase in total business travel spend in 2013, although stronger spending in the third and fourth quarters will offset comparatively tepid growth in the first half of the year.
Domestic travel has been performing better than international outbound over the last two years. GBTA expects this trend to continue as firms maneuver to serve rapidly growing markets across China. Domestic travel spend is projected to grow by 15.2 percent in 2013, and by 16.9 percent in 2014. In comparison, international outbound business travel from China has slowed considerably, with total IOB travel spending falling to 11.8 percent in 2011, and 10.9 percent in 2012. Growth is likely to recover to 13.3 percent in 2013, and a stronger 16.3 percent in 2014 – though still far removed from the growth in international outbound business travel witnessed during the first decade of the millennium.