Tibet and China's economy

Today's FT is running a front page article entitled "China locks down Tibetan towns". That set me wondering: Did the mess in Tibet possibly have a significant impact on China's overall economic performance?

At first glance, it sounds unlikely: Ethnically Tibetan China (Tibet, Qinghai, parts of Sichuan and Gansu) makes up a mere 0.5 % of China's population, and maybe 0.3 % of GDP.

What sort of impact can any event in those out of the way places possibly have?

Well, maybe more than it seems at first glance:

- Foreign tourist arrivals in Tibetan areas have all but stopped since last March. Few of those foreign tourists only go to Tibet. They use Beijing or Shanghai as a gateway, and frequently visit Yunnan, Guilin and other Chinese regions as well.

- Domestic tourism to Tibetan areas was also down sharply. Presumably, many of those potential domestic tourists went to foreign destinations such as Singapore or Thailand instead.

- An indirect effect of the Tibet/Xinjiang tensions was a drastic change in the visa regime which seriously pissed off many tourists and business-people. As a result, foreign arrivals in Beijing were actually down in 2008 compared to 2007. Has it ever happened that a city hosting the Olympics has experienced a decline in foreign visitor arrivals in the very year the Olympics took place? I doubt it.

- "Misbehavior" by Western politicians caused all sorts of retaliation from the Chinese side: Business licences were delayed, meetings cancelled, contracts not signed, boycotts of French products launched and withdrawn, and on and on. While it is hard to assign hard numbers, it seems entirely reasonable to assume that foreign direct investment was lower than it would otherwise have been.

- Public opinion in the West was negatively affected, adding to an anyway mostly sceptical view of Chinese product safety and quality. Few people will boycott Chinese products because they don't like Chinese politics. But if they're anyway not too thrilled by those products, it may well be the final push that causes them to leave Chinese-made stuff on the shelves.

All in all, it seems entirely reasonable to assume that the Tibet crisis had a negative impact on China's Q2-Q4 2008 GDP of at least 0.5 %. Not huge, but not negligible either.

(Oh, I forgot to mention: According to official statistics, Tibet's economy grew 10 % in 2008. Yeah, sure. Must have been all those tourists...)