China’s latest holiday spending still below pre-Covid levels

CHINA’S travel spending during the Dragon Boat Festival holiday last Thursday (Jun22) fell short of pre-Covid levels, underscoring the slowdown in consumption.   

Domestic tourism revenue reached 37.3 billion yuan (S$7 billion) over the period, 94.9 per cent of the amount recorded in 2019 before the pandemic, said a statement from the Ministry of Culture and Tourism. There were 106 million domestic tourism trips made, surpassing the same period in 2019 by 12.8 per cent.

China’s economy is facing mounting evidence of a slowdown in recent weeks, and several investment banks have downgraded their growth forecasts though most of them expect Beijing to still meet its relatively conservative target of around 5 per cent for the year. The country’s policymakers are also facing growing calls for economic stimulus.

Earlier this month, the Communist Party’s No 4 official Wang Huning said at a meeting that consumption was key to achieving China’s economic growth target. 

During the Labour Day holidays in May, tourism spending was 148 billion yuan, only 0.7 per cent higher than the pre-pandemic level. The number of domestic trips made over the five-day break reached 274 million, up 19 per cent from the pre-pandemic level in 2019.

The recent data points to “fading post-Covid recovery momentum for in-person services, especially when compared to the Labour Day holiday”, Nomura economist Lu Ting said in a note. “As pent-up demand fades and the risk of an economic double-dip becomes more real in coming months, we expect in-person services consumption growth to weaken further.” BLOOMBERG