MONTHLY BAROMETER – WELLNESS EDITION
Remember “Chimerica”—the notion that China and the US were so intertwined that they would end up forming just one entity? The assumption that the world they created was our inevitable future became so entrenched in the minds of most decision-makers that it became one of the central tenets of the investment world… until it ceased to be. Irrespective of how trade negotiations turn out, the Sino-American rupture is a reality. As the two countries decouple, economic, societal and geopolitical consequences will be dramatic and far-reaching, affecting their relations in domains as diverse as trade, capital flows, tourism and education. There will inevitably be many spillover effects on the rest of the world.
The impact of the rupture between the US and China on tourism is already evident. Chinese tourists’ spending in the US is plunging, and there is little doubt that the trade war is the main culprit. In 2017, 3.2 million Chinese visited the US. The number fell to 2.9 million last year, and there is ample anecdotal evidence showing that the drop will be even sharper this year. President Trump has weaponized trade, and, in return, the Chinese authorities are weaponizing tourism. This could inflict an $18 billion hit to the US tourism industry (which, from a balance of payments perspective, represents a US export) and affect industries and businesses across the board: hotels, airlines, restaurants, retailers, amusement parks and, of course, wellness. A Chinese tourist spends on average $6,700 while in the US—twice as much as the average of other international visitors. An increasing, albeit rather small, portion of this amount was being funneled toward wellness tourism. As it recedes, it will deprive the US wellness industry of some wind in its sails.