The devolution of the Chinese currency, which began in July 2015, is expected to have major consequences on the way people travel to China. While the devaluation of the Chinese currency has deep economic implications, the effect is felt directly on the tourism industry in China. Devaluation has specific implications for both Chinese and non-Chinese travelers.
The changing value of the Chinese Yuan has made China’s biggest and most populous cities more affordable for foreign travelers. As the value of the Chinese currency has decreased, it has become relatively cheaper for international visitors to purchase goods and services, travel and make investments in China. At the same time, after the devaluation of the Chinese currency, non-Chinese travelers’ spending power has increased. This is beneficial for travelers, who can now reap the full benefit of their foreign incomes by purchasing items at lower prices.
The devaluation of the Chinese Yuan has also created an alternative travel market for budget travelers. As the cost of goods and services in China has declined, budget travelers are now able to visit the country on an economical budget. The devaluation also encourages people to visit other cities as well, since they have become cheaper as well.
On the other hand, the devaluation of the Chinese Yuan has also had a negative effect on Chinese travelers. As the value of the currency has decreased, it has become more expensive for Chinese travelers to visit other countries within Asia or Europe. Similarly, goods and services in other countries have become more expensive for Chinese travelers, making it harder for them to find budget travel options.
Experts suggest that, although there are some benefits to foreign travelers from the devaluation of the Chinese currency, the long-term implications are still unknown. In the short term, budget travelers may benefit from the lower costs associated with devaluation, but in the long term, there may be negative consequences. Experts suggest that as Chinese travelers can no longer afford to visit other countries, this may result in poorer economic growth in these countries.
Therefore, it is difficult to predict the long-term effect of Chinese currency devaluation on travel to China. From the perspective of foreign travelers, it is beneficial in the short-term, but may become more unpredictable in the long-term. Additionally, the implications of the devaluation are still not known on Chinese travelers who are now within a higher budget boundary when traveling abroad.
Impact of Devaluation on the Tourism Industry
The devaluation of the Chinese Yuan has brought business to popular cities in China, such as Shanghai and Beijing. As the value of the Chinese currency has become relatively cheaper for foreign travelers, they have begun to flock into the country. As a result, the tourism industry in China has seen a positive increase in business. However, it is uncertain whether this increase in activity is temporary or not.
Furthermore, as international travelers have now become more financially powerful due to the decreased cost of goods in China, the tourism industry has seen an increasing number of people who are on the hunt for luxuries items or experiences they can now afford due to the devalued Chinese Yuan. This has had a positive effect on businesses in China as travelers can now spend more on luxuries, such as sightseeing, entertainment and other services.
Finally, the devaluation of the Chinese Yuan has also had a positive effect on the hospitality sector in the country, as hotels in China have become available to travelers at much more competitive prices. The lower prices of Chinese hospitality services have allowed for more foreign travelers to feel financially secure during their visit.
Economic Impact
The economic implications of the devaluation of the Chinese Yuan are set to be far reaching. Initially, the devaluation will lead to an increase in exports to foreign countries, as goods and services will become more affordable for foreign customers. This will have a positive effect on both local and foreign businesses in China.
At the same time, while exports will increase due to the devaluation, imports are set to become more expensive. This will lead to an imbalance between China and foreign markets, as imports will be more expensive than exports. The devaluation could also lead to inflation in the Chinese market, as foreign goods become more expensive and the demand for goods and services increases.
Furthermore, the devaluation of the Chinese Yuan could have a negative effect on the cost of living in China. As the value of Chinese currency decreases, it could lead to an increase in the cost of living as goods and services become more expensive for those living in the country.
Finally, the devaluation of the Chinese currency could also lead to further devaluation of other currencies in the international market. As the value of the Chinese Yuan decreases, other countries may view their currency as comparatively weaker and devalue their own currency as a result. This could have a damaging effect on global currency stability.
Social Impact
The devaluation of the Chinese Yuan has the potential to bring about a variety of social changes. Initially, the devaluation could lead to a rise in inequality in China, as the devaluation would benefit foreign travelers more than Chinese travelers. Those with foreign incomes would reap the full benefit of their income due to the increased purchasing power in the Chinese market.
At the same time, the devaluation could lead to reduced opportunities for Chinese travelers. As the value of the Chinese Yuan decreases, Chinese travelers will find it more difficult to travel abroad due to the cost. This could have a negative effect on the educational opportunities of Chinese travelers, as it would be more expensive to study overseas and gain experience from abroad.
Additionally, the devaluation could also lead to increased competition in the Chinese job market. As the value of the Chinese Yuan decreases, employers could prefer foreign talent as the cost of doing business becomes cheaper. This could lead to a decreased demand for Chinese employees.
Finally, the devaluation could lead to higher prices for Chinese travelers living in countries outside of China. As the value of the Chinese Yuan decreases, it would be more expensive for Chinese travelers to purchase goods and services from abroad. This could cause economic hardship to those living abroad.
Political Impact
The devaluation of the Chinese Yuan is set to have wide-ranging political ramifications as well. Initially, the devaluation could lead to tension between China and other countries in the international market, as other countries may argue that the devaluation is a form of economic competition. This could lead to a decrease in diplomatic relations between China and other countries, which would have a negative effect on global politics.
Similarly, the devaluation could also lead to increased foreign interference in the Chinese economy. Countries may argue that the devaluation is an attempt to manipulate the international market and foreign governments could be more inclined to get involved and attempt to regulate the Chinese economy.
Furthermore, the devaluation could lead to decreased global confidence in the Chinese economy. As the value of the Chinese Yuan decreases, foreign investors may be more hesitant to invest in Chinese businesses due to the decreased stability of the Chinese currency. This could lead to a lack of foreign investment in China, which would have a negative effect on the country’s economic growth.
Finally, the devaluation could lead to increased domestic unrest in China, especially in more rural areas. As the cost of living increases due to the devaluation, people in more rural areas may be more inclined to take to the streets and demand change from the government. This could have a destabilizing effect on the country.
