During the three-day Dragon Boat Festival holiday this year in China, the number of people traveling has increased, according to data released by the Chinese authorities on Tuesday, June 3. However, the average consumption per person has declined compared to last year. These indicators are seen as a barometer of consumer confidence and are closely monitored.
Even though the Dragon Boat Festival holiday is not as long as the May Day holiday, many people choose to travel during this time to relax as various regions across the country hold dragon boat racing and other activities.
According to statistics released by the Chinese Ministry of Culture and Tourism on Tuesday, during the three-day Dragon Boat Festival holiday from May 31 to June 2, there were 1.19 billion domestic trips nationwide, an increase of 5.7% year-on-year.
Despite the total domestic travel spending during the Dragon Boat Festival holiday amounting to 42.73 billion yuan ($5.94 billion USD), a 5.9% increase compared to last year, the average consumption per person has decreased. The average consumption per person was calculated at 359.1 yuan, a decrease of approximately 2.1% compared to the per capita travel consumption during last year’s Dragon Boat Festival holiday (366.82 yuan), and lower than the pre-pandemic consumption level of around 410 yuan. Compared to the per capita travel expenditure during the three-day Qingming Festival holiday in April this year (457 yuan), the decrease is even more significant at 21.4%.
These data indicate that due to the prolonged weakness of the Chinese economy and the persistent real estate crisis, consumer spending in China has been affected. The uncertainty of the US-China trade war has also influenced consumer confidence. Especially in situations of job and income uncertainty, Chinese households remain cautious about expenses.
The latest Chinese Caixin manufacturing Purchasing Managers’ Index (PMI) released by S&P Global Ratings on Tuesday showed a reading of 48.3 in May, a more significant decline from April’s 50.4, falling below the boom-bust line of 50. A PMI above 50 indicates expansion in manufacturing activities, while below 50 signifies contraction.
Dr. Wang Zhe, a senior economist at Caixin Insight Group, stated, “This is the first time in nearly eight months that the PMI has fallen below the boom-bust line, recording its lowest value since October 2022. In May, market sentiment deteriorated, with both supply and demand weakening simultaneously. The manufacturing production index fell into contraction territory for the first time in nearly 19 months, hitting its lowest level since December 2022; while the new order index fell below the boom-bust line for the first time in nearly eight months, recording a new low since October 2022.”
The contraction in the PMI comes as tensions escalate in US-China trade disputes, putting immense export pressure on Chinese factories.