Friday 30 September 2022, JW Marriott Grosvenor
November 2022, Virtual
21 November 2022, Hilton London Metropole
It’s the greatest mass movement of human beings on earth: more than 700 million people cram into planes, trains and automobiles to return home for Chinese New Year. In February, which heralded the start of the Year of the Monkey, an average of 74 million trips were made on each of the ten days prior to the holiday.
As more employment-seeking country folk flock to flourishing cities, those numbers will burgeon. In addition to eight mega-cities with more than 10 million inhabitants, there are now already 102 Chinese conurbations with populations of more than one million. In comparison, there are 35 in Europe and only nine in the US.
Fortunately for the Chinese population, investment in transport infrastructure has been high on the government agenda for some time. More than 50 civil airports have been constructed since 2006, which brought the total number to 200 last year. Another 30 are under construction, with 60 more being expanded. According to the country’s civil aviation administration, some £57 billion will be spent this year alone on aviation projects.
The aviation sector in China has grown by an average 15 per cent per year for the last three decades. That trajectory has lowered slightly of late, though analysts still predict double-digit growth for at least the next ten years.
Millions have also been poured into the development of high-speed rail across the country. At present, China operates more miles of rail track than the rest of the world combined. The network is also seen as more sustainable than air travel. Most of China’s new airports are underused.
An official last year admitted that at least 150 airports could not break even. More than half of the country’s air travel is concentrated at only ten gateways. However, demand should align with supply over the coming years as the affluent urban middle class fuels growth in business travel and outbound tourism. In short, China has a travel infrastructure that is the envy of the West.
THE IMF EXPECTS...
But those following China’s recent travails could be forgiven for feeling a bit confused. Good news and bad news come in waves. On one hand, the IMF expects China to account for nearly one fifth of the world’s economic activity in 2016. On the other, GDP is expected to fall to 6.3 per cent (down from 10 per cent in 2010).
In October last year, China’s president Xi Jinping enjoyed an extended stay in the UK. David Cameron claimed the visit generated around £30 billion in deals and investments. Trade relations were supposedly buoyant. Yet bookings made by business travellers via American Express Global Business Travel for flights to China fell 17 per cent year-on-year in 2015. Other global travel management companies have recorded similar figures.
The business and finance sections in British broadsheets paint a pretty gloomy picture. China’s burgeoning debt and over-exposed financial institutions are cause for concern. The economic slowdown has already sounded alarm bells in global markets. If the decline persists, the ripple effect could be felt around the world. But should business leaders really be worried?
China expert Gordon Orr, a senior analyst with McKinsey, remains confident about the future. He recently stated: “In debates about whether growth is a percentage point up or down, we too often lose sight of the absolute scale of China’s economy.
“No matter what rate the country grows at in 2016, its share of the global economy, and of many specific sectors, will be larger than ever. [China] is an increasingly diverse, volatile, US$11 trillion economy whose performance is becoming more and more difficult to describe as one-dimensional.”
Some sectors are booming, while others are no longer fit for purpose – a consistent trend in any large economy. It’s naive to think China is the source of the world’s economic ills. There are huge opportunities for British business, as long as they operate in the right sector. Recent regulatory changes mean foreign fund managers and brokers now have approval to open 100 per cent-owned investment operations, while demand for British talent has never been in higher demand.
Last year’s softening of business travel volumes may only be a blip. Progressive travel departments would be well advised to keep up with developments.