China holiday spending slumps as consumer demand in Asia slows

BEIJING - Chinese holidaymakers cut back sharply on travel and spending during the National Day break this week as strict Covid-19 rules discouraged movement, while signs of a consumer slowdown across Asia mount.

The number of trips booked by rail from Sept 28 through Oct 8 is expected to be 68.5 million, state broadcaster China Central Television reported on Friday, citing estimates by China State Railway Group.

That is about 38 per cent less than the 110 million trips by rail during the comparable period last year, according to Bloomberg calculations based on China State Railway's data.

Cinema tickets also plunged, with sales reaching just 1.4 billion yuan (S$282 million) as at 1pm local time Friday, according to online ticketing service provider Maoyan Entertainment. That is less than a third of the box office for the full seven-day break last year, and also much worse than the nearly 4 billion yuan earned in 2020.

The weak spending figures spell bad news for China's consumer recovery at a time when economic growth risks are mounting. The slump in the property market shows no signs of easing, global demand for Chinese goods is slowing and the currency is plunging. Several economists say Beijing is unlikely to ease its Covid-Zero policy until after March 2023.

The deterioration in the world's second-biggest economy coincides with a broader downturn across Asia in sectors from electric cars to memory chips and online shopping, and may indicate more weakness to come.

Samsung Electronics reported its first profit drop since 2019 as memory chipmakers face sharp declines in orders, with macroeconomic shocks to soaring inflation and rate hikes hammering consumer sentiment.

Back in China, the formerly bright spot of electric vehicles took a hit, with shares of Chinese makers plunging in Hong Kong on Friday on predictions of worse-than-expected orders during the holiday period.

China's markets are due to reopen on Monday with Covid-19 cases at the highest in about a month and the authorities facing increasing pressure to curb its spread before the party congress.

Despite pleas for residents to stay home during Golden Week, typically a peak period for travel, infections are flaring in holiday spots and there has been a fresh round of lockdowns from Hainan in the south to Inner Mongolia in the north and Xinjiang in the west.

The rise in cases is stoking concerns about whether similarly tough measures may be deployed more widely in the lead up to the congress, at which Chinese President Xi Jinping is expected to secure a precedent-breaking third term in power.

Mr Xi has made Covid-Zero a cornerstone of his leadership, and Beijing views the measures as key in averting the death tolls seen in other parts of the world despite its growing social and economic costs. BLOOMBERG