China has reported a surge in tourism during the recent Labor Day holiday, with tourists making a total of 295 million trips within mainland China during the five-day holiday. This was a 28% increase from the number of trips taken during the Labor Day holiday in 2019. However, despite the increase in the number of trips, tourists were spending less money per trip compared to five years ago, with average spending dropping by 6% to 565.73 yuan ($80).
In addition to the surge in tourism, there was also an increase in the number of people going to the cinema during the holiday period, with 37.77 million people attending cinemas, surpassing the 2019 levels. However, ticket sales remained about the same as 2019 levels, reaching 1.527 billion yuan ($215.7 million). This decrease in spending reflects a larger trend of Chinese consumers curtailing their spending as the economy weakens and job prospects worsen, with a record downturn in real estate also weighing on consumer sentiment.
Analysts from TD Securities noted that Chinese consumer sentiment appears shaky, as indicated by the sluggish retail sales spending momentum and a decrease in the services PMI index. According to a private sector survey, the Caixin/S&P Global services PMI fell to 52.5 in April from 52.7 in the previous month. The services sub-index under the government’s official non-manufacturing PMI also dropped sharply to 50.3 in April from 52.4 in March, the weakest reading since January. In addition, retail sales growth slowed in March to 3.1% from 5.5% in February, and consumer inflation increased by a muted 0.1% in March from a year earlier, down from 0.7% in February.
The decrease in spending among Chinese consumers is reflective of the challenges facing the economy and job market, with weak retail sales spending momentum and a decline in the services PMI index. The impact of the Covid-19 pandemic on the global economy has also played a role in the decrease in consumer spending, with the pandemic largely shutting down travel in China and the world last year. The sluggish economic growth and job prospects in China are contributing to the decline in consumer sentiment, as evidenced by the data on retail sales, inflation, and the services PMI index.
Despite the surge in tourism during the Labor Day holiday, the decrease in spending per trip and at the box office reflects the challenges facing the Chinese economy and consumer sentiment. The sluggish retail sales spending momentum and decline in the services PMI index indicate that Chinese consumers are cutting back on spending as economic conditions worsen. With the global economy still reeling from the effects of the Covid-19 pandemic, the impact on tourism and consumer spending in China highlights the ongoing challenges facing the world’s second-largest economy.
