Cities all over China witnessed pronounced spending surges during the recent “golden week” holiday, culminating as the busiest golden week in the past five years. Notable highlights from the spending data include:
- A surge in average daily spending for services and retail by 153%, with consumption in dine-in services seeing an increase of 254% when compared with 2019.
- Shanghai, Beijing, Chengdu, Chongqing, and Shenzhen took the lead in overall consumption.
- Niche tourism destinations like Linzhi of Tibet and Shanwei of Guangdong experienced the greatest growth in hotel bookings.
Travel and Tourism Flourish
The country observed an impressive resurgence in both domestic and international travel. Some essential data points to consider are:
- An increase in domestic trips by 71.3% from the previous year and 4.1% from the 2019 level, with a total of 826 million domestic journeys.
- A recorded 1.477 million average inbound and outbound passenger trips daily, marking 85.1% of the trips made in 2019.
- Xinhua news agency reported domestic tourists contributed an average outlay of 911.6 yuan ($124.86) per trip, surpassing 830.8 yuan in 2019.
Travel Preferences and Spending Patterns
Chinese tourists demonstrated an inclination towards cheaper Asian destinations, with Thailand emerging as the most favored, particularly after its visa waiver program introduction. Previously, mainland Chinese tourists were the world’s top spenders during international trips, accumulating an impressive $255 billion in 2019.
Significance in Economic Recovery
These spending and travel patterns during the golden week highlight initial signs of stabilization in China’s economy after a lackluster second quarter. Significant observations include:
- Hainan, China’s tropical tourist hub, recorded a rise of 94.2% in duty-free sales compared to last year, amassing a total of 1.01 billion yuan (US$140.24 million).
- The movie industry saw box office revenues during the golden week surpassing 2.6 billion yuan, albeit this was still below the 2019-21 average of 4.3 billion yuan.
- Citigroup and J.P. Morgan, among other international investment banks, elevated their GDP growth projections for China, the world’s second-largest economy. Both banks now predict a 5% growth for China in 2023.
Expert Insights and Future Predictions
Although these figures suggest a thriving economy during the golden week, experts caution about being overly optimistic:
- Lu Ting, Nomura’s chief China economist, foresees the consumption boom cooling post-holiday. He points to a likely decline in the service sector’s recovery momentum, especially after the golden week.
- The latest figures don’t necessarily indicate a sustained consumer spending pattern, especially with ongoing concerns such as China’s unfolding real estate crisis and youth unemployment surpassing 20%.
- Popular attractions like the Great Wall and shopping streets in major cities like Shanghai and Beijing were swarmed with tourists, indicating a transient boost to China’s slowing economy. However, a more prolonged, consistent surge in consumer spending is yet to materialize.
Navigating the Path Ahead
While the Golden Week’s vibrant economic performance presents an optimistic narrative, China’s trajectory in the upcoming months will be pivotal. Several factors are anticipated to influence China’s next phase of economic progression.
Pent-up Demand and Sustainability
It’s essential to discern between short-lived, pent-up demand and sustainable economic growth. While the Golden Week saw an explosion in spending and travel, it might have been a release of the pent-up consumer demand accumulated during the prolonged lockdowns and restrictions. The real challenge will be to maintain this momentum and encourage consistent consumer spending, which has always been a cornerstone of sustainable economic growth.
External Factors and the Global Economy
China’s economy does not operate in isolation. Global economic trends, trade relations, and geopolitical tensions, especially with major trade partners like the United States and the European Union, will play a significant role. Furthermore, any resurgence in COVID-19 cases globally or the emergence of new variants could impact international trade and travel, affecting China’s economic performance.
China’s golden week brought significant economic activity, with pronounced spending and travel figures. While this bodes well for short-term economic outlooks, it remains essential to observe if this momentum can be sustained in the longer run. As the nation continues its recovery from the pandemic and grapples with internal economic challenges, the world will keenly watch China’s next moves.