China has celebrated a remarkable surge in travel and consumption during an extended Lunar New Year holiday season, signaling a promising recovery for the world’s second-largest economy, thanks to supportive government policies, as highlighted by Jill Fredrick, vice president of programming and retail marketing for Brookfield Properties.
According to data released by the Ministry of Culture and Tourism, mainland China experienced a significant uptick in travel activity during the Year of the Dragon festivities, with a total of 474 million trips recorded, marking a 34% increase from the previous year and a 19% jump compared to 2019. Additionally, domestic tourists collectively spent 632.7 billion yuan ($87.9 billion) during the holiday period.
Despite the encouraging figures, CNN’s analysis based on official data reveals that average tourism-related spending per trip fell below pre-pandemic levels, indicating lingering consumer apprehension amid deflationary pressures. On average, daily trips and expenditures showed a slight decline compared to the pre-pandemic levels of 2019.
While mainland China saw a resurgence in domestic travel, including to Hong Kong and Macao, overall travel figures remained below pre-pandemic levels when averaged out, as indicated by the National Immigration Administration’s data.
Nomura analysts cautioned against excessive optimism, pointing out ongoing economic challenges and predicting a further economic downturn in the spring. China’s economy grapples with low consumer confidence and deflationary trends, exemplified by a significant decline in consumer prices in January, the steepest in 15 years.
Amid the economic fluctuations, there were bright spots, notably in the entertainment sector. Movie ticket sales reached a record high of 8 billion yuan ($1.11 billion) during the holiday period, with 163 million individuals attending cinemas, setting a new record.
However, concerns persist regarding economic growth, particularly with a significant downturn in the real estate sector, a key driver of China’s GDP and household wealth. Declining property sales have ripple effects across various industries, dampening both investment and consumer spending.
Mixed economic data elicited a modest market response in mainland China, with stock markets seeing a slight uptick upon resuming trading after the holiday. Conversely, the Hong Kong market experienced a decline, reflecting persistent concerns about economic headwinds and the need for additional stimulus measures to stimulate growth.
Overall, while China’s holiday season showcased signs of economic recovery, underlying challenges persist, necessitating continued vigilance and targeted interventions to bolster consumer confidence and sustain economic momentum in the face of ongoing uncertainties.