During the recently concluded “golden week” holiday, cities throughout China witnessed significant spending surges. However, economists caution that this momentum may dwindle as pent-up demand dissipates.
Meituan, a Chinese on-demand local services giant, released data showing a 153% increase in average daily spending for services and retail across the country. Dine-in consumption also surged by 254% compared to the same period in 2019. This year’s eight-day holiday, extended due to the overlapping Mid-Autumn Festival and National Day, became the busiest golden week in five years.
Shanghai, Beijing, Chengdu, Chongqing, and Shenzhen emerged as the top five cities in terms of total consumption. Niche tourism destinations such as Linzhi of Tibet and Shanwei of Guangdong experienced the highest growth in hotel bookings.
Between September 29 and October 4, the sales revenue of key retail and catering firms monitored by the Ministry of Commerce rose by 9% compared to last year. Major shopping streets across the country saw a staggering 94.7% surge in consumer footfall.
Alibaba’s online travel platform, Fliggy, reported a significant increase in the popularity of self-driving tours with car rental orders rising over 4.6 times compared to 2019. Hainan, a tropical tourist hub and duty-free shopping paradise, recorded duty-free sales of 1.01 billion yuan (US$140.24 million) during the holiday, a 94.2% increase from last year.
According to the Ministry of Culture and Tourism, domestic travel reached 826 million trips during the eight-day holiday, a 71.3% increase from last year and 4.1% higher than the pre-pandemic level in 2019. Domestic tourism revenue amounted to 753.43 billion yuan, marking a 129.5% increase from last year but only a 1.5% rise from 2019.
Dengta, a movie industry data provider, reported that China’s box office during the golden week surpassed 2.6 billion yuan, compared to 1.5 billion yuan last year.
The figure, however, still remains well below the average of 4.3 billion yuan for the years 2019-21. This can partly be attributed to a higher demand for travel, which may have overshadowed interest in the cinema, as noted by Dongwu Securities on Friday.
The travel frenzy is obvious to everyone, with per capita consumption during the extended holiday surpassing that of 2019 for the first time. This is a positive indication,” the note stated.
However, travel consumption has a limited impact on real estate consumption and is not a strong enough substitute.
The fourth quarter’s economic and market recovery calls for more robust policy adjustments, such as debt reduction and further real estate relaxations.”
As China’s economy displayed initial signs of stabilization following a disappointing second quarter, numerous international investment banks have raised their GDP growth forecasts for the world’s second-largest economy in 2023.
Citigroup and J.P. Morgan, for instance, revised their annual growth projections for China to 5%, aligning with Beijing’s growth target and surpassing their previous forecasts of 4.7% and 4.8% respectively.
While also increasing the bank’s own growth forecast for China in 2023 from 4.6% to 4.8%, Nomura’s chief China economist Lu Ting cautioned that the consumption boom might be losing steam after the holiday period, as pent-up demand for in-person services starts to taper off.
Although the services PMI in the country rose to 50.9 in September from 50.5 in August, sectors such as transport, accommodation, and catering – which spearheaded the service sector’s recovery earlier this year – all contracted in the previous month, as mentioned in Lu’s note last week.
(Source: Ji Siqi | South China Morning Post)
