Economic Reforms on Tourism

The tourism industry in China now comparing to the past few decades has grown tremendously and this is the evidence of a few historical events that has impacts on its development. Many have claimed that they are due to the economic reforms and policies established in China in the old days.

Tourism in China before the 1940s was not well established and stressed on especially during its last 10 years in which civil and international wars have stopped travel in China. It was until 1949, when the People's Republic of China was formed, that these hindrance to travel was halted and travel was encouraged again. Although outbound travel was restricted to only a few government officials and inbound travel requires special permission, signs of travel began to show since then. Only after 30 years have the travel sector been open up gradually. Chairman Mao Zedong from the Communist Part in the early 1970s announced to allow a few rightists to enter China symbolizing a relaxed restriction of entry. This was immediately followed by the announcement of the economic reform - open door policy - in December 1978 by Deng Xiaoping which allows international trade and the inflow of foreign investment. This permits a less restricted flow of entry and mark the beginning of a new era of China on the aspect of travel. Its influence on tourism and economic activities had surged drastically in which inbound tourists indicated a rise of around 40% in 1981. The unique features of China - its long history and rich cultural heritage, geological features and regional differences, tradition - were previously hidden and concealed. The opening up of mysterious China promotes curiosity for foreigners to pay visit as it was considered a "new" place.

Businesses are keen to enter this developing country due to its unpredictable potential and prospect. Tax incentives are present to attract them. Such act let foreign expertises enter and stay in China which shed light on tourism when their friends and family come to visit, raising inbound travel. These create employment opportunities to local residents and raise their demand for leisure, contributing to domestic and outbound travel. The idea is also strengthen by the 10th Five Year Plan in PRC which has unleashed opportunities for the service sectors as improvement made in its facilities will further attract people to visit due to a more comforting and pleasant environment. This plan will demand extra labor and improve its economy thus resulting in more demand for leisure and promotes travelling.

Tourism is a contributor in China's GDP, both directly and indirectly, this show major effect of China's economy.

Y = C + I + G + X+ I (1)

Visitors' consumption is the immediate result of presenting its relevance to the economy. Each year, tourists spent