Restrictions on Who Gets to Handle Foreigners in China Hurt Small Business Owners

There is a little village in front of the famed Crescent Lake in the middle of the desert near the city of Dunhuang in Western China.  To take advantage of the convenient location to the famous tourist spot, the villagers have been busy setting up one home stay after another.  By the time the author rolled around in February of 2018, practically every house in the village operates an inn, a restaurant, a tourist-oriented supermarket, or a small tour agency. 

Of course, given that Dunhuang and the Mogao Grottos nearby are quite famous among foreigners, these inns certainly want to capture a good share of the foreign travelers' market to up their incomes.  The particular inn the author stayed at is no different.  Yet, as many of these family businesses may or may not know, only authorized hotels in China are allowed to take in Foreign guests and register them with local police stations.  Everyone else, including many of the village inns, are likely violating the law.

The rule itself makes traveling as a foreigner in China increasingly difficult.  China as a whole is full of cheap hotels and hostels willing to turn over mediocre rooms to anyone at Rock bottom prices.  For the average Chinese, the existence of such a vibrant market for cheap accommodations with fierce competitions makes casual travel rather affordable around the country even at low income levels.  Unfortunately, foreigners are stuck with extremely limited options of brand name hotels often at inflated prices.

The hotel situation is not the only restrictions foreigners face.  Getting a local SIM card, essential for getting Internet on the go in China, is becoming more and more difficult.  Only the flagship stores of the three state-owned telecoms in major cities can handle non-citizens' registrations via passports, even as any corner store can get SIM registered for Chinese with national identity cards.  Given state-owned firms' long holiday breaks, getting SIM during Lunar New Year period has been next to impossible.

While foreigners have faced similar restrictions in the past, the problem has only gotten worse.  Rather ironically, the greater difficulties of today have to do with an improvement for China: stronger enforcement of law via greater use of technology.  In the years past, foreigners can just get SIM (and stay in any hotel) "under the table" registered under a Chinese person's name, the use of more technologically advanced "second generation" national identity cards have made the proposition too risky.

And greater control of citizens' information by the government using big data algorithms means that it is now much easier to detect any Chinese citizen buying multiple SIM or staying in multiple hotels at the same time.  Surely whoever that is discovered to be helping out foreigners in such illicit ways would get at least a visit and a stern warning from local law enforcement authorities.  As more people hear from the police, more are becoming unlikely to take in foreigners at the expense of the law.

The restrictions on who gets to handle foreigners is quite consistent with the Big Brother-esque attitudes of the Chinese government.  Foreigners can hold critical views of Chinese politics and act to incite rebellious views within the Chinese population, not the least through casual conversations with locals.  In the view of government officials, it is then necessary to limit who gets to come in contact with the foreigners.  By strictly vetting the foreigners, the risk is decreased, if not eliminated.

But without a doubt, the restrictions hurt the earnings of people like inn owners at the village the author is staying in.  If only big brand name hotels with trust of government officials get to make money from foreign travelers, it creates a fundamental inequality within a otherwise free-market sector of the economy.  The goal of getting villagers to shift from agriculture to the burgeoning service sectors like tourism cannot achieve its full potential.  Perhaps that's why a black market of small inns taking in foreigners by ignoring the laws continue to exist.