China’s ‘golden week’ consumer spending fails to help Beijing put its best foot forward
- Figures for tourism income, the number of tourists and average spending all fell in the first four days of October compared to the same period last year
- China has been able to show a strong recovery from the economic impact of the coronavirus, but consumer spending has lagged behind the manufacturing sector
At first sight, scenes from China’s “golden week” holiday at the start of October – traffic jams to and from major cities, massive crowds at tourist sites, and long lines at popular restaurants – seem to indicate a strong consumer spending rebound.
The images promoted by state media and widely circulated on social media paint a picture of exuberance and prosperity in the world’s second largest economy.
A joyful atmosphere during the holiday in turn helps to shore up consumer confidence and public trust in the country’s government, sentiment that Beijing needs to prepare for what officials see as long-term competition with the United States.
The data is worrying because golden week this year was meant to show a strong recovery in spending
In the first four days of October, tourism income plunged 31 per cent compared to the same period last year, while the number of tourists fell 22 per cent, and the average spending per tourist fell 12 per cent. This suggests more people decided to stay at home, while those who opted to travel, were reluctant to spend in large numbers.
Consumer outlays were suppressed during the Lunar New Year holiday in January and the Labour Day holiday in May when the coronavirus was a major concern, but the October holiday was meant to welcome a surge in so-called revenge spending from Chinese consumers, but the official numbers figures that this has not happened so far.
In addition, domestic spending during the holiday should be boosted by the fact that the borders are largely closed. During the seven-day golden week holiday last year, 7 million Chinese tourists travelled abroad – and these people are generally big spenders. The fact that many borders are closed this year should have been a boon to domestic spending.
The images showing parts of China being particularly crowded, and some restaurants being very popular, do indicate some resurgence in consumer behaviour, but they also reflect a trend that consumers are increasingly concentrating their spending, partly thanks to the popularity of online recommendations.
The big picture is that Chinese consumer spending remains weak. How to boost that will be a top priority for policymakers when they gather later this month to map out the country’s strategies for the next five years.
