In the past two months of the summer season, China’s retail sales hit the lowest point of the year. Preliminary data shows that during the eight-day-long holiday period starting from October 1, consumer demand further cooled down, adding more difficulties to the already slowing economy.
This week, China kicked off an eight-day National Day holiday, with state media promoting a tourism boom, including data like over 100 million train passengers. However, the focus is on the consumption patterns of the Chinese people, including how much they spend while traveling.
Data from the Chinese Ministry of Commerce shows that in the first four days of the National Day holiday, sales of major retail and catering enterprises only increased by 3.3%, nearly half of the growth during the May holiday. Data released by the Ministry of Transportation on Wednesday (October 8) revealed that the average passenger transport volume during the holiday increased by 6.2% year on year, but lower than the 8% growth during the May holiday.
According to the Financial Times, Shanghai Disneyland, one of China’s largest attractions, has attracted a large number of visitors. Outside the park, a ticket seller was offering tickets at a slightly lower price of 799 yuan (roughly $171) than the official price, but the atmosphere remained subdued. “Nowadays, everyone is short of money,” he said.
Li Ao was one of nearly 800,000 tourists who visited Macao this week to save money by staying in the 24-hour casinos. In his thirties and from Anhui Province, he used to be a fruit wholesaler and has been looking for part-time jobs, including delivery driver positions.
“I mainly worked for Meituan last year because I couldn’t find other jobs,” he told the Financial Times. “You can only spend money if you earn it.”
Analyst Kenneth Chow from Oliver Wyman told the Financial Times that places like parks or cultural sites with “zero cost” have become increasingly popular, where visitors can take photos and save on expenses at the same time.
Hui Shan, Chief China Economist at Goldman Sachs, said, “In terms of overall consumption, the momentum or potential impetus is not strong. There is a large number of visitors, but the spending is not significant.”
Youth unemployment reached 19% in August, the highest in two years. This is just one of the many challenges facing the Chinese government, as it grapples with deflation, the US-China trade war, an aging population, and a real estate market tightening after decades of intense construction.
Although the Chinese stock market continued to rise in September, concerns about weak consumption persist. In most countries, a thriving market would make people feel wealthier and benefit consumption. However, as stocks represent only a small portion of Chinese household wealth, improvements in asset markets have not translated into increased consumer spending. Most of the wealth of Chinese households is tied up in real estate, which is facing a crisis.
The Chinese government hopes to develop the stock market as a reliable source of income for households and a source of funding for technological ambitions.
According to Bloomberg, economists from Citigroup, including Yu Xiangrong, stated in a report on Tuesday that holiday activities have “returned to normal, but overall are more subdued.” “However, the new momentum in consumption is weak. The evidence of the ‘wealth effect’ brought about by the stock market’s rise is limited.”
In a report on Monday, Nomura Holdings’ Chief China Economist Lu Ting wrote: “We see relative weakness in overall liquidity and consumption activities.” Given that the 2025 National Day holiday is one day longer than last year, he said, “actual consumption growth may be weaker than the data suggests.”
“We expect limited wealth effects, and consumption will remain weak for the rest of the year,” added Lu Ting.