CHINA'S Premier Li Keqiang called for more policies to drive up consumption in the economy as the latest figures show a further plunge in travel and spending over a 3-day public holiday amid tight Covid controls.
Tourism revenue declined 22.8 per cent to 28.7 billion yuan (S$5.8 billion) over the Mid-Autumn Festival from a year ago. Compared with pre-pandemic levels in 2019, revenue was down 39.4 per cent, worse than last year's 21.4 per cent drop, according to figures from the Ministry of Culture and Tourism. The number of trips fell 16.7 per cent to 73.4 million from the same period last year.
The figures came as China's State Council pledged more support to stabilise the economy. At a meeting on Sep 8, Premier Li called for efforts to solve the "key problem of insufficient demand" in the economy and boost consumption as a main growth driver. He pledged to further expand investment in order to create demand and lift confidence, according to a report by the official Xinhua News Agency published on Monday (Sep 12).
China "will adopt multiple measures to stabilise growth, employment and prices", Li said. The economy is facing "slight fluctuation" as it recovers, and the current stage is a critical one that requires greater urgency, like when one climbs up a hill facing headwinds, he said.
The government urged residents to curb travel over the long-weekend holiday to avoid Covid outbreaks from spreading. Major cities and tourist hotspots including Chengdu in Sichuan province imposed lockdowns earlier this month. Xinjiang, in western China, also saw the number of visitors plummet in August after a snap lockdown in some places to contain a surge in cases.
The drop in travel spending was smaller than the 43 per cent decline over the 5-day Labour Day holiday in May but worse than the 12.2 per cent drop over the 2-day Dragon Boat Festival in June.
The economy is showing strain from all sides. Factory activity contracted for the second straight month in August, while export growth - a key support to the economy since 2020 - slowed more than expected. Subdued consumer inflation and a slow recovery in bank lending also indicate weak demand in the economy. Growth is expected to weaken to just 3.5 per cent this year, according to a Bloomberg survey of economists, far below the official target set early this year of "around 5.5 per cent".
Li said China has reserved its policy tools for this year as it hasn't significantly expanded the fiscal deficit or issued an excessive amount of money over the past few years. The comments were made after a meeting with senior officials that were sent on inspection trips to various localities to assess the rollout of stimulus policies. BLOOMBERG