The Glone and Mail - 01.08.2019

B4| REPORTONBUSINESS O THEGLOBEANDMAIL| THURSDAY, AUGUST 1, 2019

OPINION&ANALYSIS

DILBERT

F

inally, your annual vacation
is here and you are packing
your bags and headed to the
airport – along with thousands of
your closest friends, of course.
Okay, the experience is a little
stressful, but the rewards are
great: You will experience anoth-
er culture, broaden your world
view and all those good things.
And sure, you will be pouring
money into someone else’s econ-
omy, but hey, the tourists are
clogging the streets of your
hometown and spending in your
backyard, too, so it’s a win-win.
Or is it?
Tourism has huge benefits for
individuals and economies, but it
is hard to avoid the fact that it is
one of the many industries being
put under scrutiny as the world
worries about climate change
and the environment.
Already an anti-flight move-
ment is taking hold in Europe
(which means the hashtag
#trainbragging is becoming a
thing on Instagram) and cities
there and elsewhere are now
looking at visitors with some-
thing less than unadorned glee.
As high temperatures broil tour-
ists on the Champs-Élysées and
visitors scurry to see glaciers be-
fore they disappear, perhaps it’s
time to think about what all this
could mean for the tourism sec-
tor and those who depend on it.
According to the World Travel
and Tourism Council, the sector
contributed US$8.8-trillion to the
world’s economy in 2018 and was
responsible for more than 10 per
cent of all economic activity. By
its count, tourism represents one
in five new jobs over the past five
years and 10 per cent of all jobs
worldwide. It’s the second-fas-
test-growing sector in the world,
behind only manufacturing. Put-
ting a damper on it would clearly
have quick and far-reaching eco-
nomic repercussions, in addition
to the cultural drawbacks of dis-
couraging travel.

It’s a complicated situation,

though. If climate change is a

megatrend weighing on travel, it

has several different strains.

To start, there is the fact that

rising temperatures are changing

tourism destinations, which is

going to affect demand – or, to

put it another way, who wants to

book a vacation in Paris for next

July?

Then there is the fact that

tourists themselves create envi-

ronmental damage with their

zeal to see the world’s most pop-

ular cities and destinations – a

phenomenon known as “over-

tourism.” (In Thailand, an area

made famous by the Leonardo

DiCaprio movieThe Beachrecent-

ly had to be shut down because

the influx of 5,000 tourists and

200 boats a day was destroying

it.) Finally, there is the fact that

getting all those tourists from

place to place is creating a mas-

sive carbon footprint.

So is the answer to tell every-

one to stay home and enjoy stay-

cations with their families and

neighbours? That’s a non-starter

in so many ways, but clearly

some changes need to be made.

Perhaps the part of this that is

most easy to handle, for both ci-

ties and for the industry, is the

issue of overtourism. Venice, Ita-

ly, is so fed up with the whole

thing that the city has restricted

cruise ships and visitor numbers,

made some areas inaccessible

and even created separate areas

for locals and tourists. If that

sounds pretty inhospitable, keep

in mind that the city has crum-

bling infrastructure and that pil-

ing on the visitors is doing noth-

ing good for it.

Other, less dramatic measures

have been suggested to limit the

damage tourism does to cities.

Off the top there is taxation (ev-

eryone’s favourite), and whether

it’s levied on tourists or airlines

or hotels, it should be used to

make travel more expensive and

thus less accessible.

Some would like to see better

tracking of where tourists go and

what they do when they get

there, with a view to using the da-

ta to launch some kind of strate-

gic plan on how to deal with it all.

Others think countries should

push harder to sell regions out-

side big cities so as to spread both

the wealth and the damage. It

might be a bit of a hard sell, how-

ever, given that visitors to Cana-

da are usually primed to see Van-

couver or Toronto (where major

airports are located), not remote

parts of British Columbia or On-

tario, however charming those

places may be.

As to the bigger questions

around climate change and tou-

rism, much of what happens in

the future will depend on the de-

cisions made now.

For one fleeting moment there

may even be some positives be-

tween the two, as “last chance

tourism” flourishes, with people

flocking to see natural wonders

that may not exist forever.

Over the longer term, though,

the sector is likely to suffer. Given

its importance, this may be the

time for policy-makers to put the

issue on the agenda – before the

tourism industry topples and

takes the economy down with it.

Wheretourismandclimatechangecollide

Travelhashugebenefits

forindividualsand

economiesworldwide,

butitseffectonthe

environment–andvice

versa–ishardtoignore

Venice’s response

to overtourism has been

to restrict cruise ships

and visitor numbers,

make some areas of the

Italian city inaccessible

and even create separate

areas for locals and

tourists.

MIGUEL MEDINA/AFP/

GETTY IMAGES/

LINDA
NAZARETH

OPINION

Senior fellow at the
Macdonald-Laurier Institute. Her
bookWorkIsNotaPlace:OurLives
andOurOrganizationsinthe
Post-JobsEconomyis now available.

C

hina’s factory activity
shrank for the third month
in a row in July, an official
survey showed, underlining the
growing strains on the world’s
second-biggest economy as the
Sino-U.S. trade war hits business
profits, confidence and invest-
ment.
Wednesday’s weak manufac-
turing reading adds to global
growth risks and explains why
policy-makers around the world
have stepped up easing mea-
sures, with some others consider-
ing doing so soon, to counter the
fallout from international trade
frictions.
The Purchasing Managers’ In-
dex (PMI) rose to 49.7 in July,
from the previous month’s 49.4,
China’s National Bureau of Statis-
tics said on Wednesday, but re-
mained below the 50-point mark
that separates growth from con-
traction on a monthly basis. Anal-
ysts polled by Reuters had pre-
dicted a reading of 49.6.
Deteriorating global demand
saw export orders shrinking for
the 14th month, the survey
showed, though the subindex
ticked up fractionally to 46.9 from
June’s 46.3.
The contraction in total new
orders also moderated slightly,
while factory output offered one
brighter note, with growth quick-
ening this month.
The official gauge came on the
second day of U.S. and Chinese
trade negotiators’ meeting in
Shanghai, their first in-person

talks since a Group of 20 truce last

month, though expectations for

progress remain low.

“We expect that this downward

trend in manufacturing will con-

tinue in 2019 until the trade and

technology negotiations make

some progress,” Iris Pang, ING’s

Greater China economist, said.

In a row that has dragged on for

more than a year, the world’s two

largest economies have slapped

billions of dollars of tariffs on

each other’s imports, disrupting

global supply chains and shaking

financial markets. That has

prompted central banks from

South Korea to Australia to South

Africa to cut rates, with the U.S.

Federal Reserve also widely ex-

pected to ease later on Wednes-

day for the first time since the

global financial crisis.

Sluggish demand at home and

abroad has led to a months-long

spell of depressed activity for

China’s manufacturers, and a

sharp U.S. tariff hike announced

in May threatens to crush already-

thin profit margins.

The survey also showed per-

sistent decline in orders from do-

mestic customers and even

though demand conditions im-

proved slightly, it still remained

worryingly weak despite a raft of

recent stimulus measures.

Some manufactures have cut

this year’s sales target as clients

delay purchase orders in a wait-

and-see approach, while others

have already relocated their pro-

duction capacity to neighbouring

countries to avoid the tariff hit.

All of this has seen Chinese facto-

ries continuing to shed jobs in Ju-

ly.

The pressure on the manufac-

turing sector and weakening prof-

its have prompted analysts’ warn-

ings of a further period of stress

for China before growth is expect-

ed to stabilize or recover.

MORE STIMULUS

The survey also showed small and

mid-sized manufacturers fared

worse than last month, while ac-

tivity in larger companies, many

of which are state-controlled,

jumped back to expansion terri-

tory in July. That suggests policy-

makers’ efforts to support the pri-

vate sector are yet to bear fruit.

So far, Beijing has relied on a

combination of fiscal stimulus

and monetary easing to support

an economy growing at its slow-

est pace in nearly 30 years, includ-

ing hundreds of billions of dollars

in infrastructure spending and

tax cuts for companies.

But the economy has been

slow to respond and business

confidence remains shaky, weigh-

ing on investment.

A separate official business

survey showed activity in China’s

services sector grew at its slowest

pace in eight months in July,

knocked by growing pressure on

the broader economy from U.S.

trade measures, with the official

reading at 53.7 in July from 54.2 in

June.

Services growth was partly

dragged by a contraction in the

property sector, while activity in

the construction industry also

slumped, indicating recent fiscal

stimulus is yet to fully flow

through to infrastructure invest-

ment.

Beijing has been counting on a

strong services sector to pick up

the slack left by faltering trade as

it tries to shift the economy away

from a dependence on heavy in-

dustry and manufacturing ex-

ports.

China’s top decision-making

body of the ruling Communist

Party said on Tuesday that the

government will step up efforts to

boost demand and support the

economy, but will not use the

property market as a form of

short-term stimulus.

“The Politburo meeting sug-

gested government had no plans

to loosen the real estate market.

We expect property investment

to slow in the second half of this

year and that would weigh on the

construction sector,” Liu Xuezhi,

an analyst with Bank of Commu-

nications, said.

China observers have said that

Beijing’s recent growth-boosting

measures will take time to filter

through to the broader economy,

and many analysts are of the view

that further stimulus is needed to

prevent a deeper downturn and

to help stabilize growth.

“With the headwinds to

growth from U.S. tariffs, cooling

global demand and tighter prop-

erty controls likely to intensify,

we continue to anticipate further

monetary easing in the coming

months,” Julian Evans-Pritchard,

senior China economist at Capital

Economics, said.

REUTERS

Drawn-outtradewarkeepsChina’sfactoriesstuckinreversegear

RYAN WOOBEIJING

OPINION