Guolian Minsheng Securities has released a research report stating that since the second half of 2023, China has been systematically expanding the scope of countries eligible for unilateral visa-free entry. From a global perspective, inbound tourist traffic to China has over 30% growth potential. Following the relaxation of visa-free policies, improvements in consumption payment systems and cultural tourism infrastructure are expected to drive sustained growth in inbound tourist numbers. In 2025, the monthly year-on-year growth rate of international route turnover for Chinese airlines exceeded 20%, with absolute values surpassing the same period in 2019. Based on the 2025/2026 winter-spring flight schedule, Chinese carriers, led by the three major airlines, are adding new destinations and increasing flight frequencies on Belt and Road routes, such as those to Europe, the Middle East, and Central Asia. Their operational market share has significantly increased compared to the 2019/2020 winter-spring season, facilitating the shift of domestic wide-body aircraft capacity to international routes.

The main views of Guolian Minsheng Securities are as follows:

China has comprehensively eased and optimized visa-free transit policies, implementing unilateral visa-free entry for 48 countries. Since the second half of 2023, China has orderly expanded the list of countries eligible for unilateral visa-free entry. By the end of 2025, China had granted unilateral visa-free entry (for stays up to 30 days) to citizens of 48 countries and achieved mutual visa exemption with 28 countries, allowing passport holders from 76 nations to enter China without a visa. Furthermore, China has fully optimized its transit visa-free policy, applying it to 55 countries. Travelers transiting through China to a third country or region can enter visa-free through any of 65 ports located in 24 provinces, with permission for cross-province stays and activities for up to 10 days, significantly enhancing the convenience of entry procedures for tourism, business, and family visits.

From a global perspective, China's inbound tourist flow has over 30% growth potential. After visa-free implementation, optimized payment systems and cultural tourism infrastructure will promote continuous growth in inbound tourist numbers. In the decade prior to 2019, growth in China's inbound tourist traffic was nearly stagnant, with the country long acting as a source market rather than a destination. In 2018, spending by inbound tourists contributed only 0.3% to GDP. Expanding inbound tourism is an important direction for stimulating domestic demand. A comparative perspective highlights the growth potential for China's inbound traffic: intra-regional travel flows between residents of Japan and South Korea are 30% higher than inbound traffic to China. Travel from the UK, France, and Germany to Thailand, and from Australia to Japan, exceeds inbound traffic to China by 22% and 46%, respectively. Given China's vast territory and rich cultural tourism resources, merely catching up to neighboring countries implies a 30% growth potential. Policy support continues, with nine ministries including the Ministry of Commerce issuing "Several Policy Measures on Expanding Service Consumption" in September 2025, and the General Office of the State Council releasing the "Work Plan for Accelerating the Cultivation of New Growth Areas in Service Consumption" in January 2026, aiming to enhance the global competitiveness of China's inbound consumption. Air tickets, as the largest component of inbound consumption, will significantly benefit from the growth in inbound tourism.

Chinese airlines are increasing their market share to actively accommodate inbound passenger flow. It is forecasted that the compound annual growth rate (CAGR) for international passenger traffic could reach up to 15% over the next three years. Demand on China's international routes primarily consists of outbound travel by Chinese citizens and inbound travel by foreigners, while supply comes from both Chinese and foreign airlines. The monthly year-on-year growth rate for international route turnover operated by Chinese airlines has exceeded 20%, with absolute values surpassing pre-pandemic 2019 levels. The improvement in recovery is mainly due to: 1) The ongoing effect of visa-free policies; data from the National Immigration Administration shows a 26% year-on-year increase in foreign national border crossings in 2025, recovering to 87% of the 2019 level (compared to 69% the previous year). 2) Foreign airlines have been slow to restore capacity on routes to China, causing inbound demand from foreigners to spill over to Chinese carriers. In 2024, the international route passenger traffic of Chinese and foreign airlines recovered to 88% and 52% of their 2019 levels, respectively. If foreign airlines continue to hesitate in deploying capacity, the CAGR for international passenger traffic on Chinese airlines over the next three years could reach up to 15%.

Investment recommendations indicate that, based on the 2025/2026 winter-spring schedule, Chinese airlines, represented by the three major carriers, are adding new destinations and increasing frequencies on Belt and Road routes in Europe, the Middle East, and Central Asia. Their operational share has grown significantly compared to the 2019/2020 season, driving the transfer of domestic wide-body aircraft capacity to international operations. On the demand side, European countries, which previously had a low base for inbound tourism to China, showed the first signs of improvement in 2025. Long-term, the fundamental inbound market from Asia-Pacific countries is expected to see subsequent growth. The report recommends China Eastern Airlines (600115.SH, 00670), which stands to benefit significantly internationally and is based in Shanghai, as well as China Southern Airlines (600029.SH, 01055) and Air China (601111.SH, 00753), both of which have large international route networks.

Risk factors include escalation of geopolitical conflicts, significant capacity increases by foreign airlines, substantial exchange rate fluctuations, and a sharp rise in oil prices.