China slashes tax refund threshold for tourists to boost spending

In response to economic pressures stemming from a trade war, China has implemented policy changes to enhance tourist consumption. As of Saturday, these changes lowered the minimum spending required for foreign tourists to qualify for a tax refund from 500 yuan (approximately $69) to 200 yuan (around $27). Additionally, the upper limit on cash rebates has been increased to 20,000 yuan (approximately $2,745). The Ministry of Commerce and other regulatory bodies have announced intentions to expand the availability of tax refund shops, making the rebate process more convenient for international travelers. Inbound tourism plays a significant role in China's economic landscape, representing about 0.5% of its gross domestic product in 2024, significantly lower than the 1% to 3% range observed in other leading nations. This highlights a considerable potential for growth within the domestic tourism sector. In 2024, spending by inbound tourists reached $94.2 billion, marking a substantial increase of 77.8%. However, experts anticipate that economic growth may decelerate in the face of escalating tariffs. China's economy managed an annual growth rate of 5.4% in the first quarter of 2024 but is expected to face challenges as heightened tariffs—up to 145% on imports from the U.S.—begin to take effect. Simultaneously, the U.S. has imposed 125% tariffs on American goods exported to China. These economic developments underscore the complex dynamics of international trade relations and their impact on local markets. To counteract these economic challenges, Chinese officials have intensified efforts to stimulate consumer spending. These initiatives have included increased subsidies for trade-ins of auto and household appliances as well as additional funding support for housing and various struggling sectors. The goal is to create a more robust consumer-driven economy to offset potential losses stemming from external trade pressures.