Foreign-funded travel agencies that operate in Shanghai and Chongqing have been allowed to operate outbound tourism business for Chinese mainland tourists. [Photo/VCG]

Foreign-funded travel agencies that operate in Shanghai and Chongqing have been allowed to operate outbound tourism business for Chinese mainland tourists, signaling that the domestic travel agency sector is stepping forward to a higher level of opening-up, experts observed.

The latest policy was released by a guideline of the State Council on Saturday, and the regulation will be effective until April 8, 2024.

Before, foreign-invested travel agencies were not allowed to operate business for Chinese mainland residents to travel overseas, including traveling to Hong Kong Special Administration Region, Macao Special Administration and Taiwan, unless otherwise stipulated by the State Council or based on related free trade agreements.

"The policy is in line with China's promotion of opening-up, and it is of great significance to the development of the tourism market in the 14th Five-Year Plan period (2021-25)," said Cheng Chaogong, chief of tourism research at Tongcheng Travel, an online travel agency.

"From the perspective of accelerating the supply side structural reform of the tourism sector, it is necessary for the country to further improve the level of travel-agency-related opening-up and thus enhance the vitality of the market," Cheng said.

In 2017, Wancheng (Shanghai) Travel Agency Co Ltd, a foreign-funded travel agency based in the free trade area of Shanghai, was allowed to operate outbound tourism business for Chinese mainland residents, and it became the first foreign-funded travel agency in China to obtain such business qualification.

Cheng said the latest guideline indicated that the government has extended the earlier pilot policy for the free trade area in Shanghai to the whole city. He said the policy will have limited impact on the domestic travel agency sector, and will be beneficial to the high-quality development of the entire industry in the long run.

Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation, said the decision would intensify competition in the domestic travel agency sector, but it will help increase business cooperation opportunities between domestic and foreign tourism operators.

"Foreign-funded travel agencies have rich resources in traveling overseas, and their business models can be used for reference. The decision will help with the further opening-up of the domestic travel sector," Bai said.