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Palacios: CNMI will stop relying on 'tenuous' China market

Governor talking to a woman
CNMI Gov. Arnold Palacios speaks to a Guam resident at the Hilton Resort and Spa Guam, where the U.S. House Committee on Natural Resources held a field hearing on Aug. 24.Photo by Mar-Vic Cagurangan

By Mar-Vic Cagurangan

Despite China's move to lift the ban on group tours, the Northern Mariana Islands will steer clear of this market, Gov. Arnold Palacios said, noting its volatility due to the growing tension between Washington and Beijing.

The geopolitical factor compounds the scandals and controversies that China often brings into the local community.

“For a brief period, Chinese tourism and gambling revenues propped up the commonwealth’s government and economy. But this was short-lived and had unfortunate consequences,” Palacios said in his testimony before the U.S. House Committee on Natural Resources, which held a field hearing on Guam Thursday.

Garapan is the tourist district of Saipan.

The China National Tourism Administration’s reinstatement of the approved destination status agreements with some countries, including the United States, extends to the CNMI.

“It’s a blanket approval for all different countries and we’re just part of that,” Palacios told the Pacific Island Times. “We are not in the position to make that decision; it’s between the federal and the Chinese government.”

ADS is a bilateral tourism arrangement between the Chinese government and a destination, authorizing package tours and charter flights.

The policy was established to account for the growing interest among Chinese citizens in foreign travel. China imposed a ban on group tours during the Covid-19 pandemic, but recently released a list of countries where the ADS agreements are restored.

“I don’t want (the Marianas Visitors Bureau) to spend so much resources and time in that market because it’s very tenuous,” Palacios said. “The U.S. can pull it, the Chinese government can pull and we are in the middle.”


The governor said the CNMI is more inclined to develop new markers, such as Taiwan and India. “We are reinvigorating Japan, and absolutely, we want to maintain and sustain the Korean market,” Palacios said.

Prior to the pandemic, China was one of the top source markets for the CNMI.

China arrivals to the CNMI were at 1,075 compared to 47 arrivals in July 2023.

Palacios said there are currently no direct flights between Saipan and China.

According to MVA, most visitors from China are free independent travelers arriving via Seoul and Tokyo.

Historically, China has been a problematic market for the CNMI, which used to thrive in the garment industry.

“When the garment industry shut down, the commonwealth lost a major source of revenue, and drastic austerity measures had a deeply destabilizing effect,” Palacios told the natural resources committee.

“To make up for the loss, we turned to Chinese tourism, and also to Chinese casino gaming. Prior to the Covid-19 pandemic, tourists from the (People's Republic of China) comprised approximately 40 percent of all visitor arrivals in the Northern Marianas. The casino on Saipan at its peak reported billions of dollars in rolling chip volumes generated at just 16 VIP tables,” Palacios said.

“Today, Chinese tourism has dried up and the casino has shut down. The commonwealth economy continues to struggle, and the government is in deep fiscal distress,” he added.

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