The Golden Week holiday in China, which ended on October 7th, has drawn significant attention from businesses. Data shows that during the seven-day holiday period, Chinese consumers have become more cautious in their spending habits.
According to statistics released by the Chinese Ministry of Culture and Tourism, there were 765 million domestic trips made during the National Day holiday, a 10.2% increase from the same period in 2019 before the pandemic. However, the spending only increased by 7.9%. Bloomberg calculated based on the ministry’s data that the actual travel expenses per trip have decreased by 2.1% compared to 2019.
Additionally, an analysis report released by Goldman Sachs on Tuesday, October 8th, also revealed that mainland Chinese tourists reduced their domestic travel spending by about 2% per trip compared to pre-pandemic levels.
Goldman Sachs economists, including Wang Lisheng, stated in the report, “Low per capita travel expenditures and depressed service prices highlight the ongoing weakness in domestic demand in China, with consumer spending continuing to decline.”
Bloomberg noted that this is the first snapshot of how the Chinese government’s stimulus measures announced before the holiday have affected consumer confidence, as previous scattered efforts in the past months have failed to prevent economic slowdown.
While the Chinese government’s stimulus package initially boosted the stock market, the ultimate resolution of employment issues remains to be seen.
Michelle Lam, an economist covering Greater China at Societe Generale, emphasized, “Ultimately, you need a recovery in the labor market and stability in property prices.”
The stimulus measures announced by the Chinese authorities at the end of September included interest rate cuts, rare cash handouts, and measures to support the real estate and stock markets. However, they have provided little fiscal support and have not taken decisive action to address issues such as unemployment.
Since the outbreak of the pandemic, consumer spending in China has been subdued due to uncertainties surrounding future income and economic growth.
“People are becoming more cautious about their spending. At the same time, they are opting for more affordable travel methods and destinations,” Kenneth Chow, head of Oliver Wyman, told CNBC on Wednesday.