How China's Reopening its Borders Will Reshape the Global Economy
Article written by Edward Nash-Steer, Founder & Co-CEO of Altum Group and Managing Partner of Azura Search.
Having worked extensively on searches across Asia and in particular China, I was interested to see the Chinese government recently end almost three years of self-imposed isolation from the global community. This will no doubt have several knock-on consequences for the global economy and provides some positivity as we start 2023.
With the recent opening of China's borders, there will be a dramatic increase in outbound tourism. For some destinations, such as Hong Kong, the impact will be immediate; pre-covid, 4.5% of the economy was driven by tourism. More cautious destinations, such as the UK, US and others, will have to wait as their border controls and compulsory testing are likely to dampen immediate demand. Even with imposed PCR testing for people arriving from China, tourism companies have already reported seeing a 40% increase in Chinese tourists booking trips to the USA in the two weeks since the announcement was made. This should lead to an increase in consumer spending, as Citi analysts estimated that 155m Chinese people travelled abroad and spent $255b globally in 2019. The increasing tourism numbers will continue to gather pace in 2023 and prove to be a positive change for the global economy. Travel, tourism, luxury and cosmetics businesses are the obvious beneficiaries in destinations desirable to the Chinese travellers, such as London, however, the ripple effect will not be limited simply to these sectors; the positive impact will be felt far and wide.
I must also acknowledge that the opening of borders, along with the removal of the zero covid policy, will have a human consequence that cannot be underestimated. Reports from China published in the UK are limited, and my sympathies are with all those impacted by this wave of infections.
From the meetings I have with Group CEOs of global businesses based in Europe and the US, most are looking back to China for growth opportunities. Although political tensions continue to rise between the US, Europe, and China, this has not impacted the demand from Western businesses looking to commercially benefit from an economically resurgent China. As an Executive Search firm, we are already seeing the early signs of increased demand. The CEOs I speak to are looking for leaders who can drive growth in a highly competitive market. Many can talk a good game but finding those with a proven track record is always more difficult. Finding the right leader is the key to success in China.