Tourism revenue from China’s “Golden Week” holiday surged year-on-year but edged only slightly above its pre-Covid level, suggesting relatively muted consumer sentiment continues to weigh on the country’s economic growth.
(Bloomberg) — Tourism revenue from China’s “Golden Week” holiday surged year-on-year but edged only slightly above its pre-Covid level, suggesting relatively muted consumer sentiment continues to weigh on the country’s economic growth.
Domestic tourism revenue reached 753.4 billion yuan ($103 billion) for the eight-day holiday period, an increase of 1.5% from the comparable level in 2019, the country’s tourism ministry said in a statement on Friday. The number of people traveling rose 4.1% compared with 2019.
But travel and spending surged compared with lockdown-hit 2022, with 826 million traveling representing a 71% increase from last year, and spending jumping nearly 130%.
The holiday data “show that Chinese people are keen to get out and enjoy life now the economy has reopened, but still cautious about spending,” said Duncan Wrigley, chief China economist at Pantheon Macroeconomics. “People are worried about their income prospects, amid a shaky labor market.”
The numbers fell short of the ministry’s own forecast of just under 900 million travelers spending more than 780 billion yuan.
The world’s second-largest economy is searching for stronger footing as the property sector and weak confidence drag on activity. Concerning data over the summer prompted authorities to step up fiscal spending and add support for housing sales in an attempt to help the economy achieve the government’s GDP growth target of around 5% for 2023.
Analysts pointed out that spending during China’s previous major national holiday in May was 0.7% above 2019 levels. The increase from that to 1.5% represents a “trivial” improvement, Wrigley added.
Spending per tourist is still 2% below the 2019 level, suggesting “the scarring effect caused by the pandemic has not completely gone away” Larry Hu, Head of China Economics at Macquarie Group wrote in a note on the data.
Nevertheless, the holiday data suggest a consumption recovery is still ongoing. Combined with increasing policy support “the Chinese economy has continued to improve at a modest pace,” Hu added.
Read more: China Holiday Travel Exceeds Pre-Covid Level in Boost to Economy
Banks including Citigroup Inc. and JPMorgan Chase & Co. raised their economic growth forecasts in recent days to 5% for the year, saying that recent data showed the economy had reached its cylical bottom.
An official gauge of manufacturing activity returned to expansion in September for the first time in six months, a sign that stimulus may be taking root.
Read more: US Banks Raise China GDP Forecasts, See Economy Past Bottom
Though travel was strong, “we do not think it is enough in isolation to conclude that consumer sentiment has improved decisively,” said Martin Rasmussen, a London-based senior strategist at macro research firm Exante Data.
–With assistance from Li Liu.
(Updates with quotes, charts from fourth paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.