China urged to subsidise cash-strapped households despite higher holiday spending

Chinese holidaymakers boost tourism industry during Dragon Boat Festival but recovery still threatened by broader slump in consumption

Think tank calls for Beijing to issue 1.5 trillion yuan in special treasury bonds to prop up disposable income

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Shoppers look at shoes in a Beijing mall on June 15. Analysts are concerned about an uneven economic recovery in China, with consumer confidence taking a hit from income and job uncertainties. Photo: AFP

Published: 4:00pm, 25 Jun 2023

Chinese holidaymakers gave a big boost to the domestic tourism industry during the three-day Dragon Boat Festival last week, but market worries persist about how to lift broader consumption to drive the country’s economic recovery.

Lingering worries about a balance-sheet recession affecting Chinese households – a key cause of weak consumer spending so far this year – prompted a key think tank in Beijing to call for 1.5 trillion yuan (US$208.85 billion) in direct subsidies for cash-strapped households on Sunday.

Domestic trips grew 32.3 per cent year on year to 106 million between Thursday and Saturday and tourism revenue increased 44.5 per cent from a year earlier to 37.3 billion yuan, according to data released by the Ministry of Culture and Tourism.

The number of trips was about 112.8 per cent that of the same period in 2019, and the revenue was 94.9 per cent of the total recorded four years earlier.

Meanwhile, the country’s box office revenue reached 900 million yuan – the second-highest takings for the holiday ever.

The Ministry of Commerce also reported other kinds of “vigorous spending” during the holiday, with jewellery sales up 13.6 per cent year on year and an 18.5 per cent rise in entertainment and leisure spending, state broadcaster CCTV reported on Saturday evening.