China's Labour Day tourist spending plummets on Covid-19 curbs

Tourist spending over the five-day vacation period was 64.7 billion yuan, down 43 per cent from last year. PHOTO: AFP

BEIJING (BLOOMBERG) - Chinese travel and spending plummeted over the national Labour Day holiday as the government's stringent Covid Zero restrictions and fears of infection kept people at home.

Tourist spending over the five-day vacation period was 64.7 billion yuan (S$13.5 billion), down 43 per cent from last year, the Ministry of Culture and Tourism said on Wednesday (May 4). The number of domestic tourist trips over the break fell to 160 million from 230 million last year, it added.

The data highlights the impact China's efforts to halt the spread of the Omicron variant of coronavirus has had on the world's second-largest economy.

Authorities locked down major hub Shanghai in late March, with millions of people still confined to their homes. In Beijing, restrictions were tightened over the Labour Day break to contain a Covid-19 outbreak.

Residents face repeat testing and have been barred access to public places without a negative result. The city also shut more than 60 subway stations on Wednesday.

The slump in spending will drag down services activity, which already contracted last month. The Caixin services purchasing managers index for April, scheduled for release on Thursday, is expected to drop to its worst level since February 2020.

Government officials estimated ahead of the Labour Day break that passenger traffic over the holiday, which began on Saturday, would plunge 62 per cent from last year. They expected road traffic to drop by half while travel by plane could slump 77 per cent.

Nomura Holdings estimates that 43 cities are under partial or full lockdown, or are facing some district-level restrictions, affecting about 328 million people.

"Despite falling caseloads of Covid, there is no sign that this Omicron wave will be over soon, and the Chinese government is still quite determined to hold onto its Zero Covid strategy," Nomura economists wrote in a note.

The Communist Party's Politburo, the top decision-making body, pledged last week to meet its economic targets, promising to boost stimulus and speed up investment in infrastructure.

Despite those signals, Nomura said it remains "deeply concerned about growth, as we believe the Omicron variant and the Zero Covid strategy represent the dominant challenges to growth stability".

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