Although often overshadowed by the relatively short but intense May and October ‘Golden Weeks’, China’s summer travel season is at the core of the country’s tourism economy. The volumes at play—such as the record 887 million passenger railway trips in the 2024 season[1]— demonstrate the potential that July and August hold for domestic tourism.

However, despite impressive volumes, China’s tourism sector struggled in 2024, with reports of tourists cutting back on spending, especially in the high-end segment of the market.[2] While much of this is likely due to dampened consumer sentiment across the Chinese economy, missed potential in China’s service sector because of structural issues is partly to blame.  

With just over a 50 per cent share of value added to the economy, China’s service sector sits well below countries with a comparable gross domestic product (GDP) per capita.[3] In addition to consumer confidence constraints, this is likely due to the relatively restricted nature of the country’s service sector, with limited market access and regulatory hurdles creating challenges for both foreign-invested and domestic service providers alike.

Given that the tourism sector—despite remaining relatively closed to foreign investors—is touted as a key driver of the economy amidst efforts to boost consumption,[4] China would be well placed to use it as a sandbox for further opening in the service sector. For example, a series of pilot schemes that allow foreign-invested travel agencies to operate in select cities still restrict business scope to outbound international travel,[5] locking foreign investors out of the domestic market.

Fewer restrictions in the tourism services sector would also allow for the creation of more unique and smaller scale experiences, increasingly in demand by younger travellers.[6] Many of China’s tourism ambitions—understandably given the volumes at play—focus on mass tourism.[7]

However, this only exacerbates the concentration of tourists into a few major cities and key destinations.[8] For the country to achieve its goal of becoming a “world tourism powerhouse” by 2025,[9] more openness is needed in the sector.

Inbound international tourists represent an underdeveloped market, with China attracting far less foreign tourist spending as a percentage of GDP than major international tourist destinations like Japan and France, despite having the second highest number of United Nations Educational, Scientific and Cultural Organization World Heritage Sites of any country.[10]^&[11]

The high volumes at play in China often mask the extent of potential left on the table, and this is likely the case in both the tourism sector and the service sector as a whole. Further opening, in the form of fewer restrictions on market access, would put the country a step closer to reaching its full potential.

[1] Update: China’s summer rush ends with record high railway passenger trips, Xinhua, 1^st September 2024, viewed 20^th June 2025, <https://english.news.cn/20240901/05131ed2ee47435789818136b41ca818/c.html>

[2] Sun, L, China’s travel industry faces reality check of ‘worst ever’ season, South China Morning Post, 6^th October 2024, viewed 20^th June 2025, <https://www.scmp.com/economy/china-economy/article/3281095/chinas-travel-industry-faces-reality-check-worst-ever-season>

[3] Jain-Chandra, S, Kothari, S, and Novta, N, China’s Service Sector Is an Underutilized Driver of Economic Growth, International Monetary Fund, 2^nd August 2024, viewed 20^th June 2025, <https://www.imf.org/en/News/Articles/2024/08/02/cf-chinas-service-sector-is-an-underutilized-driver-of-economic-growth>

[4] Summer travel boom in China to propel economic momentum, Xinhua, 7^th April 2024, viewed 20^th June 2025, <https://global.chinadaily.com.cn/a/202407/04/WS66866abaa31095c51c50c63a.html>

[5] Ministry of Commerce Issues Notice on the Work Plan for Accelerating the Comprehensive Pilot Programme for Expanding the Opening Up of the Service Industry, Ministry of Commerce, 11^th April 2025, viewed 28^th July 2025, <https://www.gov.cn/zhengce/zhengceku/202504/content_7019915.htm>

[6] Xinhua Headlines: Chinese youngsters embrace more diversified tourism options, Xinhua, 19^th May 2024, viewed 26^th June 2025, <https://english.news.cn/20240519/df3cac2054ec42f2ad4864241218d27f/c.html>

[7] China sets out 5-year path for tourism, State Council, 20^th January 2022, viewed 26^th June 2025, <https://english.www.gov.cn/policies/latestreleases/202201/20/content_WS61e9256dc6d09c94e48a3fd2.html>

[8] Li, N, How China is winning back foreign visitors: China Explained, CGTN, 7^th March 2025, viewed 27^th June 2025, <https://newseu.cgtn.com/news/2025-03-07/How-China-is-winning-back-foreign-visitors-1BvgoJJJ2Pm/p.html>

[9] Ibid.

[10] Ibid.

[11] Top 10 countries with most UNESCO World Heritage Sites in 2025, The Times of India, 16^th July 2025, viewed 16^th July 2025, <http://timesofindia.indiatimes.com/articleshow/122573872.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst>