French Tourism Sector Faces Cancellations over Unrest

Days of violent protests in the wake of the police killing of a 17-year-old have begun to take a toll on France's tourism sector. JEFF PACHOUD / AFP
Days of violent protests in the wake of the police killing of a 17-year-old have begun to take a toll on France's tourism sector. JEFF PACHOUD / AFP
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French Tourism Sector Faces Cancellations over Unrest

Days of violent protests in the wake of the police killing of a 17-year-old have begun to take a toll on France's tourism sector. JEFF PACHOUD / AFP
Days of violent protests in the wake of the police killing of a 17-year-old have begun to take a toll on France's tourism sector. JEFF PACHOUD / AFP

Days of violent protests across France after the fatal police shooting of a teenager have started to impact the country's tourism sector, with hotels and restaurants facing cancellations while some have also suffered damage in the unrest.

Since the death of 17-year-old Nahel during a traffic stop in a Paris suburb on Tuesday, "our hotel members have suffered a wave of cancellations of reservations in all the territories affected by the damage and clashes," said chef Thierry Marx, president of the main association for hotel and catering industry employers.

Marx said Friday he was receiving daily alerts from industry professionals who have suffered "attacks, looting and destruction of their businesses, including some restaurants and cafes”, AFP reported.

"Our establishments are intrinsically hospitality venues, and sometimes even refuges and places of help in crisis situations. They must not suffer the consequences of anger that they have not aroused and we condemn these actions," he added.

Marx wants the authorities to do "everything" to guarantee the safety of people in the hotel and catering industry in the world's most popular tourist destination.

The French retail federation (FCD) also called for reinforced police security around stores, said managing director Jacques Creyssel.

The riots "gave rise to real scenes of looting", he said, with "more than a hundred medium and large food or non-food stores vandalized, looted or even burned".

These incidents "are extremely serious and have an extremely heavy cost", according to Creyssel, who said he had asked the economy, interior and trade ministers to act.

The Paris Ile-de-France Chamber of Commerce said it was ensuring its teams were mobilized to "provide the necessary support and technical assistance, particularly in terms of continuing operations, insurance compensation, etc..." for traders and managers of affected companies.

Security concerns

The GHR organization for independent hotels and restaurants in France deplored that "foreign (TV networks) are starting to show images of Paris on fire and blood, which does not correspond to reality".

"Will the violence and riots continue and cause a real wave of cancellations? That's the risk," managing director Franck Trouet told AFP.

"Asian tourists, in particular, who are very concerned about security, may not hesitate to postpone or cancel their trip," he warned.

Didier Arino, managing director of the Protourisme firm said: "Tourists who know us well, like the Belgians or the British, who also have problems themselves in their suburbs, will be able to make sense of things".

But in the end, he said "it's as if we were doing a negative publicity campaign worth several tens of millions of euros for destination France".

The confederation of tobacconists was also indignant at the "looting and ransacking of shops, including 91 tobacconists during these last days of clashes".

"If it continues like this, it can significantly complicate the organization of the Olympic Games, especially since a good part of the events will take place in Seine-Saint-Denis," a disadvantaged area in the north of Paris, said Jean-Francois Rial, president of the Paris Tourist Office.



China’s Economy Meets Official Growth Target, but Many Feel a Downturn

 People shop around at a market in Beijing, Thursday, Jan. 16, 2025. (AP)
People shop around at a market in Beijing, Thursday, Jan. 16, 2025. (AP)
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China’s Economy Meets Official Growth Target, but Many Feel a Downturn

 People shop around at a market in Beijing, Thursday, Jan. 16, 2025. (AP)
People shop around at a market in Beijing, Thursday, Jan. 16, 2025. (AP)

China's economy matched the government's ambitions for 5% growth last year, but in a lopsided fashion, with many people complaining of worsening living standards as Beijing struggles to transfer its industrial and export gains to consumers.

The unbalanced growth raises concerns that structural problems may deepen further in 2025, when China plans a similar growth performance by going deeper into debt to counter the impact of an expected US tariff hike, potentially as soon as Monday when Donald Trump is inaugurated as president.

China's December data showed industrial output far outpacing retail sales, and the unemployment rate ticking higher, highlighting the supply-side strength of an economy running a trillion-dollar trade surplus, but also its domestic weakness.

The export-led growth is partly underpinned by factory gate deflation which makes Chinese goods competitive on global markets, but also exposes Beijing to greater conflicts as trade gaps with rival countries widen. Within borders, falling prices have ripped into corporate profits and workers incomes.

Andrew Wang, an executive in a company providing industrial automation services for the booming electrical vehicle sector, said his revenues fell 16% last year, prompting him to cut jobs, which he expects to do again soon.

"The data China released was different from what most people felt," Wang said, comparing this year's outlook with notching up the difficulty level on a treadmill.

"We need to run faster just to stay where we are."

China's National Bureau of Statistics and the State Council Information Office, which handles media queries for the government, did not immediately respond to questions about the doubts over official data.

If the bulk of the extra stimulus Beijing has lined up for this year keeps flowing towards industrial upgrades and infrastructure, rather than households, it could exacerbate overcapacity in factories, weaken consumption, and increase deflationary pressures, analysts say.

"It seems dubious that China precisely hit its growth target for 2024 at a time when the economy continues to face tepid domestic demand, persistent deflationary pressures, and flailing property and equity markets," said Eswar Prasad, trade policy professor at Cornell University and a former China director at the International Monetary Fund.

"Looking ahead, China not only faces significant domestic challenges but also a hostile external environment."

'UNEASE'

Chinese exporters expect higher tariffs to have a much greater impact than during Trump's first term, accelerating a reshoring of production abroad and further shrinking profits, hurting jobs and private sector investment.

A trade war 2.0 would find China in a much more vulnerable position than when Trump first raised tariffs in 2018, as it still grapples with a deep property crisis and huge local government debt, among other imbalances.

So far, Beijing has pledged to prioritize domestic consumption in this year's policies, but has revealed little apart from a recently-expanded trade-in program that subsidizes purchases of cars, appliances and other goods.

China gave civil servants their first big pay bump in a decade, although the higher estimates measure the overall increase at roughly 0.1% of GDP. Financial regulators got steep wage cuts, as have many others in the private sector.

For Jiaqi Zhang, a 25-year-old investment banker in Beijing, 2024 felt like a downturn, having seen her salary trimmed for a second consecutive year, bringing the total reduction to 30%. Eight or nine of her colleagues lost their jobs, she said.

"There is a general feeling of unease in the company," said Zhang, who has cut back on buying clothes and dining out. "I'm ready to leave at any time, just that there's nowhere to go right now."

SCEPTICISM

The world's second-largest economy beat economists' 2024 forecast of 4.9% growth. Its fourth-quarter 5.4% pace was the quickest since early 2023.

"China's economy is showing signs of revival, led by industrial output and exports," said Frederic Neumann, chief Asia economist at HSBC.

But the last-minute bounce in growth may already have been flattered by front-loading of shipments to the US ahead of any new tariffs, which will inevitably lead to a pay-back, he said.

"There will be an even bigger need to apply domestic stimulus" this year, Neumann said.

China and Hong Kong shares rose slightly, but the yuan lingered near 16-month lows, under pressure from sliding Chinese bond yields and the tariff threat.

Subdued markets reflect wavering confidence in China's outlook, analysts said.

Beijing has rarely missed its growth targets. The last time was in 2022 due to the pandemic.

"Are investors around the world going to invest in China because they hit 5%? No," said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, who expects slower 2025 growth. "So it's becoming an irrelevant target."

Also, long-standing skepticism about the accuracy of official data has shifted into higher gear over the past month.

A bearish commentary by Gao Shanwen, a prominent Chinese economist who spoke of "dispirited youth" and estimated that GDP growth may have been overstated by 10 percentage points between 2021 and 2023, vanished from social media after going viral.

In a Dec. 31 note, Rhodium Group estimated that China's economy only grew 2.4%-2.8% in 2024, pointing to the disconnect between relatively stable official figures throughout the year and the flood of stimulus unleashed from about the mid-way mark.

This included May's blockbuster property market package, the most aggressive monetary policy easing steps since the pandemic in September and a 10 trillion yuan ($1.36 trillion) debt package for local governments in November.

"If China's actual growth is below headline rates, it suggests there is a broader problem of China's domestic demand that is contributing to global trade tensions," Rhodium partner Local Wright told Reuters.

"Overcapacity would be a far less pressing issue if China's economy was actually growing at 5% rates."