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Customers shop for Lunar New Year deals at a duty-free shop in Haikou, capital of south China’s Hainan province, on Thursday. Photo: Xinhua

China’s weak consumption over Lunar New Year may signal ‘worsening economy’, analysts say

  • Deterred by the discouraging travel policies and sporadic outbreaks of the Omicron variant, more than 70 per cent of domestic tourists chose short-distance trips
  • A nearly 48 per cent increase in trips among migrant workers from January 17-31 did little to help boost box office receipts and tourism revenue, Nomura says

Consumption over the week-long Lunar New Year holiday in China failed to get anywhere near pre-pandemic levels, and some analysts warn that the downtrend could signal a worsening economy.

During the holiday period that ended on Sunday, Chinese tourists took 251 million trips and contributed 289.2 billion yuan (US$45.4 billion) in tourism revenue – 26.1 per cent and 43.7 per cent less than the respective totals during the holiday in 2019, and 2 per cent and 3.9 per cent below the holiday last year, according to the Ministry of Culture and Tourism.

Similar to last year, local authorities across the country urged people to stay put for the holiday, while ramping up efforts to curb travel, including by imposing stringent quarantine measures and offering cash handouts to people who stuck around.

Deterred by the discouraging policies and sporadic outbreaks of the Omicron coronavirus variant, more than 70 per cent of domestic tourists chose short-distance trips, according to online travel agency Qunar.com.

China’s services sector activity growth slowest in 5 months due to virus

The total number of trips taken on major types of transport from January 17-31 – the busy pre-holiday travel period for migrant workers returning to their hometowns – saw a 47.6 per cent increase from last year, but it was still 64.6 per cent less than in 2019, according to the Ministry of Transport.

“Despite a nearly 48 per cent increase in the number of people returning to their hometowns for the Lunar New Year holiday compared with last year, a contraction in movie box office sales and tourism revenues – due perhaps to the worsening economy – suggests that this did not result in materially higher consumption demand,” a Nomura report published on Monday said.

As a major consumption indicator, box office sales also declined compared with last year.

Despite a total box office sale of 6 billion yuan during the week, the number of viewers decreased by about 46.3 million, or nearly 30 per cent, compared with last year, and stood at 114 million. This was attributed to rising ticket prices and sporadic coronavirus outbreaks that forced cinemas to close in some parts of the country.

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China’s Omicron outbreaks dampening Lunar New Year travels

China’s Omicron outbreaks dampening Lunar New Year travels
Despite lacklustre consumption, positive trends appeared in certain sectors such as winter sports and tourism, as well as in local and digital spending.
“Despite Beijing’s call to front-load supportive measures at the start of this year, we believe GDP growth could slow further [in the first quarter],” Nomura said, adding that more supportive measures were expected only after the upcoming “two sessions” legislative meetings next month.

In the island province of Hainan, a free-trade port and a duty-free hub, its duty-free shops recorded nearly 2 billion yuan in sales for the holiday week. Sales and the number of shoppers increased by 144 per cent and 128 per cent, respectively, compared with last year.

And in regions such as Shanghai, Chongqing, Hebei, Hunan and Sichuan, local retail sales increased compared with last year.

China expects to see about 50 trillion yuan in annual retail sales by 2025

Bookings at ski resorts increased by 54 per cent, year on year, while bookings of winter- and ski-themed sites were up nearly 40 per cent through Saturday, according to online travel agency Trip.com.

During the so-called golden week, flight bookings to Heilongjiang, Jilin and Liaoning – provinces in China’s Northeast region known for its cold and winter tourism – surged by more than half.

China’s postal and courier industry also saw 749 million parcels received and delivered during the seven-day holiday, according to the State Post Bureau on Monday.

And there also appeared to be an increase in digital transactions.

During the first five days of the holiday, NetsUnion Clearing Corporation, the clearing-house platform backed by the People’s Bank of China, recorded 6.2 billion online transactions totalling 4.2 trillion yuan (US$660 billion) – up 5.3 per cent and 11.6 per cent compared with the same period last year.

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