In a strategic move to stimulate domestic consumption and counteract economic challenges posed by the trade war with the United States, China has announced a reduction in the minimum purchase amount required for foreign tourists to claim tax refunds.
China unveiled a series of new economic measures on Sunday, including a reduction in the minimum spending required for foreign tourists to qualify for tax refunds. This initiative aims to boost domestic consumption and attract greater investment through the tourism sector, as the world’s second-largest economy grapples with escalating trade tensions with the United States.
According to a joint statement from the Ministry of Commerce and other government agencies, travelers can now apply for a tax refund with a minimum purchase of 200 yuan (approximately $27) at a single store within one day. Previously, the minimum required spending was 500 yuan (around $69), highlighting the authorities’ commitment to simplifying refund processes for international visitors.
Additionally, the maximum cash refund limit has been doubled to 20,000 yuan (roughly $2,745). The government plans to expand the network of eligible tax refund stores and streamline administrative procedures to enhance the shopping experience for tourists. In heavily frequented tourist areas, immediate refund stations will be established to allow travelers to receive their rebates promptly after purchases.
The Economic Potential of Inbound Tourism
During a press conference, Sheng Qiuping, China’s Vice Minister of Commerce, emphasized that inbound tourist consumption accounted for only 0.5% of China’s GDP in 2024, compared to 1% to 3% in many developed economies. This gap indicates substantial growth potential for the country’s inbound tourism sector.
According to Sheng, foreign tourists’ expenditure in China reached $94.2 billion last year, marking a remarkable 77.8% year-on-year increase. These figures underscore a strong recovery in the tourism sector following recent global disruptions, including the COVID-19 pandemic.
Economic Pressures Behind the New Policy
The timing of these reforms coincides with growing economic pressures. While China’s GDP expanded by 5.4% in the first quarter of 2025 — largely driven by strong exports ahead of new U.S. tariff hikes — analysts warn of a potential slowdown in the coming months.
With U.S. tariffs on Chinese imports soaring up to 145% and China’s retaliatory tariffs of 125% on American goods, the bilateral trade environment has become increasingly strained. Nevertheless, China continues to stress its commitment to maintaining an open economy while simultaneously taking measures to support domestic consumption and private investment.
Key initiatives include offering greater subsidies for vehicle and home appliance replacements, as well as injecting additional funding into the housing sector and other cash-strapped industries. Reducing the tax refund threshold for tourists forms part of these broader efforts to stimulate demand and foster economic resilience.
Through these policies, China aims not only to mitigate the negative effects of the ongoing trade conflict but also to strengthen the role of inbound tourism as a driver of economic growth and to reinforce its image as an attractive destination for global travelers and investors.
