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OPINION: Enter the Dragon – Hawaii’s Tourism

July 2, 2012, 1:20 PM HST
* Updated July 3, 11:36 AM
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Ah, the 1980s. We remember them fondly. Reagan and Gorbachev helped thaw the cold war, MTV launched a music revolution, and Eddie Murphy still made good movies.

A Japanese automobile plant. Image courtesy of the University of Rhode Island.

Oh! And let’s not forget the Japanese. Through a combination of cult-like corporate devotion and a commitment to quality engineering, their export-driven economy and rising bank accounts became a source of serious xenophobia in the west. Large real estate purchases by Japanese businessmen led to an irrational fear that soon the land of the rising sun would “own everything.”

Those were the days.

Japan’s economy has been stalled since the 1990s. What’s worse, the population is aging, and there’s a serious lack of sex (read: low birth rate). Well, maybe there is sex, but there are too few babies to prove it forensically. With a shrinking workforce supporting a growing number of seniors, Japan’s finances are being squeezed worse than most people realize.

As of 2011, Japan’s debt stood at around 230% of its gross domestic product (GDP). If you’re not familiar with the term, don’t fret. Economists, being socially awkward, are addicted to acronyms. Just think of GDP as “all the stuff a country makes in one year”. The Japanese are borrowing more than double what they make.

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That is the highest level of debt held by any developed nation. To give that number some context, let’s spin the globe around to look at Europe. Spain, currently on the Euro zone’s “wall of shame,” held debt equivalent to 68% of its GDP (ranking it  No. 46 in the world by debt).

Fires burn after a riot. Image courtesy of New York University.

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But why isn’t Japan having a Euro-like financial meltdown? It comes down to trust. Investors know that 10 years from now, an apartment purchased in Tokyo will still belong to them, and walking the surrounding neighborhood, they won’t risk getting hit with a Molotov cocktail. The same can’t be said for Greece or Spain. So, no matter how imperfect it is, Japan looks like a very tidy place to park your assets.

But being the least of all evils is not a good long term policy, and the Japanese know it. Their legislature is pushing through a controversial increase in the national sales tax, from 5% to 10% by October 2015, in an effort to get their ballooning debt under control.

Raising the price of pretty much everything isn’t a stellar way to increase commerce, so the tax is likely to take a bite out of the Japanese economy. The end result of Tokyo’s debt woes has yet to be written, but it’s safe to say Hawaii shouldn’t count on the Japanese to fill up our tour buses in the years to come.

The future of Hawaii's tourism lies in China. Image file from Wikimedia Commons.

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Who then, will buy all our trinkets, snap photos of our attractions, and load up our buffet lines?

For the answer, let’s go back to that wonky debt-to-GDP list. Sitting enviably near the bottom of the pile, past No. 130, is the booming economy of China.

With growing middle and upper classes, and more English speakers than the United States itself, the Chinese are becoming a serious source for visitors. The Hawaii Tourism Authority expects 2012 arrivals to grow by 28%. That number would likely be higher if it were easier for the Chinese to come here.

President Obama recently stated his intent to streamline the application process for tourist-visas (three weeks is the new goal), but visiting the islands from China would still be a chore. To really kick-start our tourism industry, the US will need to grant Chinese visitors a full visa waiver.

Currently citizens from 36 countries can visit the United States for up to 90 days at will, and the waiver program has been proven to give a serious boost to tourist traffic. Following the implementation of waivers for Koreans in 2008, arrivals from that region have risen 35%, and keep growing every year.

If President Obama gets his way, citizens of Taiwan will also be granted visa-free visits. There is no reason the Chinese shouldn’t be given the same treatment.

Arguments against this are just flashbacks to that good old ‘80s xenophobia.

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