China’s Golden Week holiday spending lags behind pre-Covid-19 figure

BEIJING – Chinese tourists shelled out less money during their long holiday that ended on Oct 7 than before the Covid-19 pandemic, even as signs emerged that spending is stabilising after a recent barrage of stimulus measures unveiled by the government.

While travellers made 10.2 per cent more trips during the Golden Week break than in 2019, spending increased by only 7.9 per cent, according to data released by the Ministry of Culture and Tourism.

That means per-trip expenditure actually dropped 2.1 per cent from five years earlier, according to Bloomberg calculations based on the ministry’s figures. 

Even so, daily spending averaged about 131 yuan (S$24.20) per trip, up from 113 yuan during the five-day Labour Day holiday in May. 

“Low tourism spending per head and subdued services prices highlighted still weak domestic demand and continued consumption downgrading,” Goldman Sachs economists said in a note.

It is the first snapshot of how the measures announced by the government right before the break are feeding through to consumer confidence after months of piecemeal efforts failed to stem an economic slowdown. The stimulus package powered a world-beating rally in Chinese stocks, despite concerns that more needs to be done to ensure demand will continue to recover.

“The stock market rally and trade-in scheme probably helped support consumer sentiment, but it remains to be seen if that can be sustained,” said Greater China economist Michelle Lam at Societe Generale. “You need a recovery in the labour market and stabilising house prices ultimately.”

Policies announced by the authorities in late September ranged from interest-rate cuts to rare cash handouts and steps to prop up the property and stock markets. But they offered little in the way of fiscal support and showed a lack of decisive action to address unemployment or put a floor under a property market downturn. 

While vowing to speed up infrastructure spending, officials from China’s top economic planning agency on Oct 8 also stopped short of unleashing greater stimulus initiatives. The meeting held by the National Development and Reform Commission (NDRC) proved a disappointment to investors looking for more fuel for the stock rally.

Ms Lam said expectations prior to the NDRC briefing were “too high” since fiscal stimulus is outside the agency’s remit. “Policymakers want a sustainable bull market, not a repeat of 2015’s episode,” she noted, referring to the stock market crash nine years ago.

In another tentative sign of stronger consumer sentiment, retail sales during the national day holiday rose 9 per cent from the same period in 2023, the official Xinhua news agency reported on Oct 8, citing data from the State Taxation Administration.

Mainland visitors also stepped up travel to Hong Kong during 2024’s break compared with the same period in 2023. About 170,000 mainland visitors entered the city on average every day, up 27 per cent from 2023, the government of the financial hub said.

The key to boosting sentiment is fiscal policy support, said chief China economist Duncan Wrigley at Pantheon Macroeconomics.

“The pattern since reopening has been stronger consumption during holidays, only to fade afterwards,” he added. “This time might be different with the change in policy tone, but only as long as China follows up with fiscal policies to nurture the fragile improvement in sentiment.” BLOOMBERG