China’s service sector looks to shine during ‘golden week’ as Beijing eyes stronger domestic spending

Eight-day holiday period offers chance for China’s tourism sector to bounce back, but domestic travel is expected to be down from same time last year

Economist Yu Yongding says consumer spending may not be a strong growth driver this year, as many Chinese have income concerns in post-coronavirus climate

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China’s service industry is hoping to see a big boost during the eight-day “golden week” holiday period that starts on Thursday. Photo: Xinhua

Published: 6:15pm, 30 Sep 2020Updated: 3:42pm, 5 Oct 2020

Pent-up demand for services – from travel to entertainment to eating out – could drive Chinese spending during the “golden week” national holiday period that starts on Thursday, but a short-term boost is unlikely to help the domestic service sector fully recover this year from the damage caused by the coronavirus.

And much of that increased spending may come from affluent Chinese, with the middle- and lower-class expected to be more conservative with their money as the nation’s wealth gap has widened amid the uneven pandemic recovery.

China is the world’s first major economy to return to growth since the coronavirus emerged, but the recovery has depended mainly on government-led industrial production and investment.

A predicted “retaliatory rebound” from pent-up demand for services has not yet been seen, but Beijing is counting on stronger consumer spending to support its inward-facing dual-circulation economic strategy that looks to rely on the domestic demand for future development.

Given that, the eight-day mainland holiday is likely to serve as a litmus test for the momentum of the service sector in the world’s second-largest economy. The nationwide break, from October 1-8, is a day longer than last year, as National Day and Mid-Autumn Festival both fall on the same day.