During the May 1st holiday, just ended, data shows that Chinese people have increased their travel during the holiday period, especially short-distance trips. However, there has been a reduction in spending, indicating that the Chinese economy is still sluggish, restraining consumer confidence.
The Ministry of Culture and Tourism of the Chinese Communist Party stated on Monday (May 6) that during the five-day holiday that ended on Sunday, the total number of domestic tourists in mainland China reached 295 million, an increase of 28% compared to the same period in 2019. However, the holiday travel revenue was 166.89 billion yuan (equivalent to 23.6 billion US dollars), only a 13.5% increase from the level in 2019. This suggests that compared to five years ago, tourists are spending less per trip, with average expenses dropping by 6% to 565.73 yuan (80 dollars).
China’s film box office has also shown a similar pattern. The number of moviegoers during the holiday period reached 37.77 million, surpassing the 35.09 million in 2019. The film box office revenue is roughly equivalent to that of 2019, reaching 1.527 billion yuan (215.7 million US dollars), with a decrease in average spending.
Amid a declining real estate market, high youth unemployment rate, and pressure from tightening inflation, Chinese people have been cutting back on spending. The record-low performance of the real estate market, which accounts for 70% of household wealth, is dampening consumer confidence. Boosting consumer confidence has become a key challenge for the Chinese Communist Party this year.
According to Reuters, Jonathan Yan, partner at consulting firm Roland Berger in Shanghai, said that following a boost in spending during the recent Qingming Festival holiday, the data weakens hopes for a consumption rebound but is not surprising.
Yan stated, “Overall, I believe people are tightening their belts, confidence is being suppressed, but they still want to have the experience of traveling.” He added that many travelers chose short-distance overseas destinations such as Japan and South Korea to spend the five-day holiday.
He said, “They are not spending more money than before, but they are still traveling while reducing some consumption or cutting down on shopping expenses.”
The ticket prices of domestic airlines in China dropped on the eve of the holiday as predictions indicated that more travelers would choose to drive or book in advance to save costs.
Guotai Junan Securities stated in a research report on Monday that there was a significant increase in the number of short-distance travels during the holiday.
Leading travel agency Ctrip added that the increase in travel from small and county towns exceeded that of major cities.
Analysts at TD Securities stated in a recent research report, “Looking at the weak momentum in retail sales expenditure and the sharp reversal of the service industry PMI in April, consumer confidence in China appears unstable.”
On Monday, a private sector survey showed that the Caixin/Markit Global Services PMI fell from 52.7 in March to 52.5 in April.
According to statistics released last week by the National Bureau of Statistics of the Chinese Communist Party, the sub-index of the service sector under the government’s official non-manufacturing PMI dropped significantly from 52.4 in March to 50.3 in April. This is the weakest reading since January.
The growth rate of retail sales in March slowed down from 5.5% in February to 3.1%. Consumer inflation in March increased slightly by 0.1% year-on-year, lower than the 0.7% in February. The February increase was the first in six months.