CHINESE tourists were thrifty spenders over the nation’s lengthy Chinese New Year holiday season even as overall trips were up, underscoring the difficulties the world’s second-largest economy faces in trying to revive confidence and shake off deflation.

Per-capita tourism revenue over the eight-day festival in China this year slumped 9.5 per cent versus a similar timespan in 2019, according to estimates from economists at Nomura Holdings and Goldman Sachs Group.

The weakness comes despite official figures comparing those two periods showing a 19 per cent uptick in domestic trips by tourists and a nearly 8 per cent increase in tourism-related sales.

“Although we do see some strength in the data, we urge market participants to exercise caution,” wrote Lu Ting, Nomura’s chief China economist, in a Sunday research note. “The ongoing economic dip is likely to worsen into the spring.”

China is trying to build momentum amid pressure from ongoing turmoil in the property market, which has dented confidence and hampered activity in an economy the International Monetary Fund expects to be the top contributor to global growth over the next few years. Deflation has proven hard to reverse, with prices falling last month at the deepest pace since the global financial crisis.

That makes travel and spending over the nation’s most important holiday season all the more important to watch.

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There were some bright spots. Official data on box office ticket sales reached a record eight billion yuan, albeit over a holiday period that was longer than usual.

Tourism to Hong Kong and Macau also surged, as did trips to places such as Singapore where Chinese travellers were able to enjoy relaxed visa rules.

Even so, economists warned that any uptick in consumption may not last.

“Given the prolonged property downturn and still-weak confidence, the sustainability of the services sector recovery remains uncertain,” wrote the Goldman economists in a note late on Sunday (Feb 18). They suggested additional policy easing is needed to improve household finances, bolster demand and boost market sentiment.

Markets were mixed on Monday as onshore markets in China reopened after the lengthy holiday break.

The benchmark CSI 300 Index closed up 1.2 per cent in afternoon trading, though stocks for consumer staples flagged. The yuan traded onshore was little changed at 7.1974 per US dollar.

The upbeat travel and spending data may also have been skewed by other factors, including the length of the holiday – eight days instead of last year’s seven.

“Most of the beat comes from the traffic number,” said Willer Chen, an analyst at Forsyth Barr Asia, citing the differences between the number of people travelling compared to how much individuals actually shelled out during the holiday. “If you look at average spending, austerity still exists.”

Figures from Baidu pointed to depressed spending at shopping malls: Foot traffic at major malls across China was 8 per cent lower than during last year’s holiday, despite 2023 data being hampered by a wave of Covid infections.

Spending on goods such as pork, meanwhile, remains subdued – as are purchases of big-ticket items such as cars. Passenger car sales fell 26 per cent in January compared to December, according to the China Association of Automobile Manufacturers.

There are signs the government is concerned about the economic recovery and how to restore sentiment. At a meeting of the nation’s Cabinet on Sunday, Premier Li Qiang urged “pragmatic and forceful” action to boost confidence. BLOOMBERG