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UNCLAS SECTION 01 OF 03 BEIJING 000312 
 
SENSITIVE 
SIPDIS 
 
COMMERCE FOR JSECUNDY, IHILL, SGUZMAN, NMELCHER 
STATE PASS USTR FOR TSTRATFORD, KALVAREZ, AMAIN 
STATE EAP/CM SFLATT 
STATE EEB/TPP/MTAA CHAYS 
STATE EEB/TRA/AN KURS, VLIMAYE-DAVIS 
DEPT OF TRANSPORTATION FOR KGLATZ, NPORTER, JTRAINI, PIRVINE, AND 
ABEST 
FAA NATIONAL HQ FOR RCICERO 
 
E.O. 12958:  N/A 
TAGS: BEXP ETRD CVIS EAIR CH
SUBJECT: THIRD U.S.-CHINA TOURISM WORKING GROUP HELD IN SANYA 
 
¶1. (SBU) SUMMARY:  The Third U.S.-China Tourism Working Group (TWG) 
meeting under the Joint Commission on Commerce and Trade (JCCT) was 
held on January 13, 2010, in Sanya, China, chaired by U.S. Deputy 
Assistant Secretary for Services Joel Secundy and Vice Chairman Zhu 
Shanzhong of the China National Tourism Administration (CNTA).  The 
two sides highlighted recent achievements, which included a doubling 
of approved CNTA travel agents and an increase in Chinese visitors 
to the U.S. in 2009, in spite of the economic crisis.  CNTA raised a 
range of service quality issues and infrastructure concerns such as 
airport seating and bilingual signage.  The U.S. responded that some 
service issues stemmed from the price sensitivity of Chinese 
tourists, and raised its own concerns about Chinese agents using 
non-approved U.S. agencies and limits on direct advertising and 
promotion in China.  The chairs signed a 2010 Work Plan which 
includes tourism export promotion and a Tourism Directors Summit. 
The next working group meeting will be held in the United States. 
END SUMMARY. 
 
¶2. (SBU) U.S. and Chinese delegations met in Sanya, Hainan, China on 
January 13, 2010 for the Third Tourism Working Group (TWG) meeting 
under the Joint Commission on Commerce and Trade (JCCT).  The 
meeting was chaired by Deputy Assistant Secretary for Services, Joel 
Secundy for the United States and Vice Chairman Zhu Shanzhong on 
behalf of the China National Tourism Administration (CNTA).  VC Zhu 
explained the choice of venue was due to a new State Council 
decision to make Hainan into a world-class "International Tourism 
Island," under which the island would enjoy preferential policies, 
including new duty free privileges.  Zhu observed, however, that 
island infrastructure was inadequate, and that it would take a lot 
of work to turn the proclamation into a reality. 
 
¶3. (SBU) VC Zhu noted that the working group's efforts have helped 
increase U.S.-China tourism.  Although U.S. tourists to China 
dropped 5 percent from January to November 2009 to 1.58 million, 
Chinese tourist to the U.S. actually rose 5 percent during the same 
period to 760,000.  (Note:  These statistics only measure tourists 
travelling on direct flights.)   DAS Secundy noted the positive 
effect that rising Chinese tourism was having on the balance of 
trade in tourism, and encouraged the working group to continue the 
momentum of progress. 
 
¶4. (SBU) Mr. Long Wei, Manager of Travel Agencies for the CNTA began 
the Chinese introduction, declaring 2010 the "year of improving 
travel agencies."  Long said China had 1.2 billion (potential) 
domestic tourists and the country was receiving much attention from 
around the world with promotions for outbound travel.  Between 
August 2008 and December 2008, 316,000 Chinese tourists made the 
United States their first overseas stop, on average 63,200 per 
month.  Between January and November 2009 the number was 760,200, or 
69,100 per month, a 10 percent increase.  (Note:  These statistics 
measure person/trips, so the same individual may be counted more 
than once). 
 
¶5. (SBU) Long observed that with the recent expansion of the Tourism 
MOU, 700 Chinese travel agencies are authorized to book package 
tours to the United States; roughly 70 percent of the total number 
of travel agencies with CNTA approval.  But Long admitted that group 
travel under the MOU was not as much as he had expected.  Long 
presented a case study for Jilin Province that sent 220 groups for a 
total 3,000 people to the United States on a variety of 6-14 day 
package tours to the mainland and Hawaii, with the cost ranging from 
RMB 10,000 to 25,000 (USD 1,466 to 3,665).  Long also discouraged 
U.S. industry from starting a pricing war, but rather encouraged 
them to emphasize good service. 
 
¶6. (SBU) Long also raised a list of problems cited by CNTA travel 
agencies with U.S. tours.  Price competition among land operators 
resulted in lower service quality -- some firms had drivers double 
as the tour guides, subcontracted without monitoring quality, or 
took tourists only to shops which offered the U.S. agent a sales 
commission.  U.S. travel focuses too heavily on the east and west 
coasts, with few opportunities in other regions.  Airline 
overbooking causes problems for tour groups.  At airports, seating 
is insufficient and warning signs are almost never offered in 
Chinese.  Finally, Chinese visitors are unaware of tourism resources 
in the U.S. due to the lack of promotion in the Chinese market. 
 
¶7. (SBU) Long said CNTA would like to intensify tourism promotion 
campaigns (especially for tailored tourism), and he asked the U.S. 
to provide more information on our legal framework and safety.   He 
 
BEIJING 00000312  002 OF 003 
 
 
also hoped the U.S. government would pay more attention to tourism 
issues.  CNTA continues to track problems Chinese tour operators 
encounter with U.S. land operators, and asked the U.S. delegation to 
find ways to monitor these groups to eliminate issues with 
inadequate vehicles, bad guides and misrepresented shopping 
experiences.  Long also expressed hope that the U.S. would work to 
improve the Chinese language resources at tourist destinations and 
provide more convenient services to Chinese tourists interested in 
travel to the southern and central parts of the U.S.  CNTA offered 
to facilitate the approval of the "Visit USA" office of the National 
Tourism Association (NTA) that will be located in Shanghai and will 
seek support from CNTA Shanghai. 
 
¶8. (SBU) Mr. Liu Kezhi, DG of Marketing and International 
Cooperation Dept, reported on the development of the Chinese tourism 
industry.  China is now the fourth largest destination in the world 
and the first outbound market in Asia.  In 2009, total tourism 
revenues were RMB 1.26 trillion (USD 184 billion), up 9 percent; and 
the volume of domestic tourism was estimated at 1.9 billion 
person/trips, up 11 percent.  Liu reported USD 39 billion in 
currency exchange.  China saw 47.5 million outbound person/trips in 
2009, up 3.3 percent. 
 
¶9. (SBU) Liu also explained that tourism was a key element in 
overall development plans for rural areas.  On December 1, 2009, the 
State Council issued an Opinion on the acceleration of tourism 
development.  The Chinese government hopes tourism will become an 
"economic pillar" and is actively encouraging tourism consumption. 
At the end of December, the State council issued another Opinion 
pushing forward construction efforts to develop Hainan into an 
internationally recognized tourist destination.  CNTA promised to 
share an English translation of the Opinion with the U.S. 
delegation. 
 
¶10. (SBU) Liu cited Australia as a good model for tourism promotion. 
 The Australian Tourism Board organizes seminars for Chinese 
travelers and holds an annual review meeting with CNTA.  Tourism 
Australia trains the staff of Chinese outbound tour operators, 
creating an "Aussie specialist" with a good understanding of the 
tourism resources available in the country. 
 
¶11. (SBU) NTA President Lisa Simon said that the NTA had amended the 
requirements in June 2009 for U.S. tour operators under the MOU to 
address some of the problems the Chinese had previously raised 
concerning the quality and safety of tours offered by NTA-approved 
agencies.  These new requirements on safety, insurance and accurate 
representation can be found on the NTA website in "Rules of the 
Road" under the MOU.  She explained the NTA "Visit USA" office that 
will be set up in Shanghai will help provide information about U.S. 
travel and support to the Chinese travel agents that the CNTA has 
long been requesting. Charles Reynolds, Visa officer at the U.S. 
Embassy in Beijing reported that the United States issued 362,185 
business and tourism visas in China in 2009, 8.6 percent more than 
in 2008.  On average, more than four out of five applications were 
approved. 
 
¶12. (SBU) Simon echoed the mutual sentiment of achievement in 
promoting tourism, but also raised some concerns from the U.S. 
perspective.  Although the NTA updated its list of approved tour 
operators on its website every six months, the corresponding list on 
the CNTA site was an old one from 2008.  NTA would like to update 
its own list on their "Visit USA" website, but needed some basic 
information on the Chinese travel agencies.  Simon noted that price 
sensitivity by Chinese agents and consumers was an important factor 
in driving tour prices down.  In answer to the question of American 
companies not marketing adequately, she brought up the inability of 
American firms to directly advertise as hampering that effort. 
Simons also observed that Chinese travel agents do not always use 
NTA approved partners in the U.S., and that these agents do exist 
throughout the country, not just along the coasts.  Finally, Simons 
asked CNTA to reconsider their prohibition on the promotion of legal 
gaming, since the legal gaming industry was suffering since they 
could not conduct any promotions in China. 
 
¶13. (SBU) In the question and answer portion of the meeting, CNTA 
asked if a U.S. company hires a bus, which party has legal 
responsibility; and what is the requirement for insurance for travel 
agents?  NTA answered that the U.S. Department of Transportation 
(DOT) requires insurance for any motor vehicle, and that travel 
agents are required to carry at least 1 million dollars in liability 
 
BEIJING 00000312  003 OF 003 
 
 
insurance.  NTA inquired about rogue Chinese travel agents going 
around NTA approved agencies.  CNTA reported they would deal 
severely with any offender among their members, and invited the U.S. 
to report incidents to Mr. Liu since all Chinese agents were 
required to use an NTA approved agency. 
 
¶14. (SBU) DAS Secundy and VC Liu jointly declared the meeting a 
success, and concluded by signing the Work Plan for 2010.  The Work 
Plan will include (1) mutual support of tourism export promotion; 
(2) cooperation in tourism investment; (3) bilateral tourism 
development support through the promotion of information exchange; 
(4) local-level tourism cooperation through the "China-U.S. Tourism 
Directors Summit;" and (5) enhanced communication between the CNTA 
and the USDOC to ensure successful travel under the MOU. The next 
working group meeting will be held in the United States. 
 
¶15. (SBU) United States Delegation: 
- Joel Secundy, DAS, Department of Commerce (DOC) 
- Isabel Hill, Office of Tourism, DOC 
- Sandra Guzman, Market Access and Compliance, DOC 
- Gwen Lyle, Commercial Officer, Beijing FCS 
- David Gossack, Principal Comm. Off., Shanghai FCS 
- Charles Reynolds, Consular Officer, Embassy-Beijing 
- Lisa Simon, President, National Tourism Assoc. (NTA) 
- Matt Grayson, Government Relations, NTA 
 
¶16. (SBU) Chinese Delegation: 
- Mr. Zhu Shanzhong, Vice Chairman, CNTA 
- Mr. Liu Kezhi, DG, Marketing and Intl. Coop. Dept., CNTA 
- Mr. Long Wei, Div. Dir. of Travel Agency Mgmt., CNTA 
- Ms. Tang Bin, Div. Dir. of Public Service, CNTA 
- Ms. Wang Yanjie, Dep. Div. Dir., Intl. Coop. Dept., CNTA 
- Ms. Zhang Li, Intl. Coop. Dept., CNTA 
- Ms. Zhu Ning, Intl. Coop. Dept., CNTA 
- Mr. Chen Chen, Secretary to Vice Chairman Zhu 
 
HUNTSMAN