Revenue from inbound tourism to China is projected to reach approximately US$470 billion by 2040, more than doubling its current contribution to the country’s economy, according to a report by the Swiss investment bank UBS. The growth in foreign visitor spending is expected to help compensate for sluggish domestic demand amid ongoing economic challenges.

UBS forecast that inbound tourism revenue would account for about 1.5 percent of China’s gross domestic product (GDP) by 2040, growing at a compound annual rate of 8.9 percent starting from 2025. This expansion would raise China’s share of the global tourism market to around 15 percent by that time. Chen Xin, head of China leisure and transport research at UBS, noted that policymakers are increasingly relying on inbound tourism as a key driver to stimulate consumption amid weak domestic demand.

To support this growth, China has gradually expanded visa-free travel policies since 2023, now including about 50 countries such as Australia, Russia, Singapore, and most European nations. This represents an increase of 188 percent in the visa-free list compared to pre-2023 levels. Additionally, UBS projects that international flight capacity to China could rise by roughly 150 percent from last year through 2040, further enhancing accessibility for foreign tourists.

UBS highlighted China’s competitive travel costs as another factor attracting inbound visitors. The firm also anticipates a significant shift in spending patterns among foreign tourists, with expenditures on hotels, dining, and shopping increasing to about 78 percent of total spending by 2040, up from 51 percent in 2019. The report cited ongoing improvements such as tax-refund policies and the strengthening of domestic brands, which are expected to boost retail activity. A growing number of mid- to higher-end hotels and a broader schedule of international events are also likely to elevate the overall tourism experience.

The report identified key beneficiaries of this trend to include airports, hotels, premium shopping malls, and online travel agencies, where rising international visitor traffic could drive revenue growth. UBS further noted that per-capita spending by foreign tourists is expected to outpace that of domestic travelers, supporting higher margins in the hospitality and retail sectors.

Structurally, UBS concluded that China is well positioned to capture a larger share of global travel spending given its rich tourism resources, comparatively affordable travel costs, and improving ease of access. While inbound tourist numbers are forecast to grow at about 4.7 percent annually through 2040, per-capita spending is expected to increase by around 4 percent. Over the same period, domestic travel is projected to grow at an annual rate of 4.8 percent.

The report came amid broader concerns over subdued domestic consumption in China, weighed down by a prolonged real estate sector downturn and a challenging labor market. As a result, policymakers view expanding inbound tourism as an important lever to diversify and strengthen consumption-driven economic growth.