Mainland China is strategically positioning itself to leverage tourism as a potent engine for economic growth, a move amplified by the ongoing trade dynamics with the United States. Recognizing the significant potential of international visitors to bolster domestic spending, the nation is actively implementing measures to attract and incentivize tourist activity. Among these initiatives, the liberalization of tax refund policies stands out as a key driver, presenting a unique opportunity for Hong Kong to capitalize on its strategic location and duty-free status.

Despite a notable surge in revenue from foreign tourism in the preceding year, its contribution to China's vast gross domestic product remains relatively modest, accounting for a mere 0.5%. This figure pales in comparison to the 1% to 3% contribution observed in most developed nations, highlighting the substantial untapped potential for tourism to flourish as a pillar of the mainland's economy.

In a proactive move to harness this potential, Chinese authorities have introduced a series of reforms aimed at enhancing the appeal of the nation to tourists. At the heart of these reforms lies the liberalization of tax refund policies on purchases, a concession highly valued by international visitors. Spearheaded by the Ministry of Commerce and five other departments, the decision to ease tax refund regulations took immediate effect, carrying significant implications for Hong Kong, a renowned duty-free port.

Under the revised regulations, visitors to the mainland, including residents of Hong Kong, are now eligible to claim refunds on taxes paid on purchases exceeding 200 yuan (HK$213), a substantial reduction from the previous threshold of 500 yuan. Furthermore, the maximum cash refund has been doubled from 10,000 yuan to 20,000 yuan, with no limitations imposed on bank transfers. These changes are expected to significantly stimulate tourist spending, which has yet to fully recover to pre-pandemic levels.

In addition to the revised tax refund policies, the authorities are implementing a range of complementary measures to further enhance the tourism experience. These include expanding the network of locations where tourists can claim refunds, diversifying shopping options, and promoting the sale of a wider array of domestic products tailored to the preferences of international visitors. A diverse range of retailers, encompassing both foreign and Chinese brands, as well as establishments specializing in heritage and cultural products, will be invited to join the duty-free network, further enriching the shopping landscape for tourists.

Premier Li Qiang, in his government work report delivered in March, foreshadowed these reforms as a strategic means to stimulate consumption. As part of the broader effort to boost tourism, the government had previously waived visa requirements for visitors from 38 countries, streamlining the entry process and encouraging greater international travel to China.

While it remains premature to definitively assess the full impact of the tax incentives and visa exemptions, there is a palpable sense of optimism that Hong Kong stands to benefit significantly from an influx of mainland-bound tourists. Tourism remains a cornerstone of Hong Kong's economy, and the city should seize the latest easing of regulations as an opportunity to attract more visitors and bolster its own domestic consumption.

The key to unlocking this potential lies in fostering multi-destination tourism, where visitors plan comprehensive trips encompassing various regions of the country, with a particular focus on the Greater Bay Area, which includes Hong Kong and Macau. By strategically positioning itself as an integral part of these multi-destination itineraries, Hong Kong can tap into a larger pool of tourists and maximize its economic gains.

Tourism industry leaders have rightly emphasized the importance of collaboration between Hong Kong and mainland authorities on tourism initiatives within the Greater Bay Area and beyond. By working in close coordination, the two regions can leverage their respective strengths and resources to create a more compelling and seamless tourism experience for international visitors.

With effective promotion and cross-border cooperation, visits to southern China, and even further afield, would be incomplete without including a stopover in Hong Kong, the country's most internationalized city. By showcasing its unique blend of Eastern and Western cultures, its vibrant culinary scene, and its world-class attractions, Hong Kong can solidify its position as a must-visit destination for tourists exploring the region.

In conclusion, mainland China's strategic push to boost tourism presents a significant opportunity for Hong Kong to revitalize its tourism sector and drive economic growth. By capitalizing on its duty-free status, fostering collaboration with mainland authorities, and promoting multi-destination tourism, Hong Kong can effectively ride the wave of China's tourism boom and secure its position as a premier destination for international travelers. The easing of tax refund regulations, coupled with visa exemptions and other supportive measures, creates a favorable environment for Hong Kong to attract more visitors, stimulate domestic consumption, and further solidify its role as a vibrant and dynamic international hub.

By Lewis Koch

The author is a current affairs commentator.

The views do not necessarily reflect those of Orange News.

Photo: Xinhua