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China's holiday spending slows, underlining tough start to 2019
THE downward pressure on China's consumption persisted over the Chinese New Year holiday, the annual festival when people travel, shop, and give gifts or money.
People in China spent 1.01 trillion yuan (S$202 billion) at restaurants, shopping malls and online outlets over the the week-long holiday, according to the Ministry of Commerce. That was 8.5 per cent higher than during last year's festive period, but the slowest increase since at least 2011.
Increasingly frugal Chinese consumers are sending chills through global investors, with the pullback in spending hitting the profits of companies such as Apple Inc, Swatch Group AG and luxury carmakers.
Weaker growth, the trade war with the US, and a crackdown on debt all undercut momentum in 2018, sending vehicle purchases into contraction for the first time in almost three decades and retail sales growth to the slowest pace since 2002.
"We believe household consumption will likely be sluggish, " wrote Lu Ting, chief China economist at Nomura Holding Inc, citing the quick buildup of household debt, lacklustre income growth outlook amid the economic slowdown and the cooling property sector. "We expect the government to rely more on infrastructure investment to stabilise economic growth, but it may take time for infrastructure investment projects to start."
Spending at tourist venues rose 8.2 per cent to 513.9 billion yuan, the state broadcaster CCTV reported, citing data from the Ministry of Commerce, slower than the 12.6 per cent rise last year. Domestic box office revenue was 1 per cent higher than in 2018, according to a report in The Paper, which cited statistics from a cinema ticketing service platform of Alibaba Pictures.
Those who are still shopping are increasingly doing it online, with JD.com reporting a 43 per cent jump in sales around the holiday versus a year earlier.
Cellphones, computers and home appliances were at the top of shopping lists, and there was a surge in purchases of kitchenware and furniture, according to a report from the second largest e-commerce site in the nation.
Spending growth in smaller cities jumped 55 per cent on Alibaba Group Holding Ltd's Tmall, faster than in major metropolises, where residents are being squeezed by higher housing prices.
Tourists chose Hong Kong, Thailand and Macau as their top overseas destinations, according to Alibaba's online tourism site. The US was the seventh most popular spot, even amid the trade tensions.
China mainland visitors to Macau reached almost 900,000 during the week-long Chinese New Year holiday, climbing 26 per cent from last year's festive holiday, according to Macau's tourism office. That was more than double last year's growth.
The week-long Chinese New Year falls on different dates in January or February each year. During the holiday, hundreds of millions travel to their hometowns or go overseas, visit relatives and dine out. This year's holiday was Feb 4-10, while it was Feb 15-21 in 2018. BLOOMBERG