24 October 2016
More and more mainland Chinese are exploring their country by road. Photo: Reuters
More and more mainland Chinese are exploring their country by road. Photo: Reuters

Road trips an important driver of GDP growth in China

Tourism may contribute more than 10 percent of China’s gross domestic product this year, owing to burgeoning domestic travel to mainland destinations.

Cheaper oil prices, rising car ownership and improving infrastructure are prompting more Chinese to take road trips.

This supports tourism-related businesses such as hotels and creates growth opportunities for the car rental market.

China’s hotel revenue per available room outpaced that of popular outbound destinations such as South Korea and Thailand during October’s Golden Week.

This may indicate that more Chinese travelers are holidaying within the country to avoid pricier foreign trips and geopolitical risks.

Many Chinese may be opting for road trips because of lower gasoline prices and highway toll waivers.

Gasoline demand rose 10.9 percent in October to 9.83 million tons, because of greater car ownership and longer traveling distances.

The average distance traveled per trip has jumped to 64 kilometers, 36 percent higher than in 2008.

Car sales reached about 16.5 million this year by the end of October.

These factors may spur car rental demand, supporting growth for China’s leading companies, Car Inc. and eHi Car Services.

The number of rental cars should reach 700,000 by 2017, compared with 410,000 in 2013, Frost & Sullivan said.

It’s now about 0.4 percent of passenger vehicles, compared with 1.7 percent in the United States and 2.6 percent in Japan.

The views expressed in this article are those of Margaret Huang, an analyst at Bloomberg Intelligence.

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