In a signal of improved Chinese consumer sentiment, there has been a resurgence in travel during China’s Lunar New Year holiday. Official reports indicate that more than 61 million rail trips were taken in the first six days of the national New Year holiday, marking a 61% increase compared to the same holiday period in 2023. This figure represents the highest recorded in the past five years according to data compiled by Bloomberg News. The key question now is whether the upsurge in consumer spending will indicate a sustainable enhancement in the Chinese economy.
As per state media references to the Ministry of Finance, hotel sales on Chinese e-commerce platforms saw a remarkable surge of over 60% from the previous year. Nevertheless, some analysts express reservations regarding this year’s holiday travel increase as a reliable early indicator of economic progress. HSBC Holdings Plc noted that while Chinese consumer spending surpassed expectations, exceeding the levels of 2023 was considered a modest achievement given the prevailing challenges such as the widespread COVID-19 outbreak at that time.
The reports of heightened travel and expenditure bring positive implications for the Chinese economy, which faces growth challenges this year amidst the lingering property crisis affecting confidence and persistent deflationary pressures. Consumer prices in China experienced a 0.8% year-on-year decline in January, marking the lowest level since 2009 and prompting the government to contemplate bolstering stimulus measures to invigorate the economy. China Central Television reported that Shanghai witnessed approximately 8.8 million tourists just before the Lunar New Year holidays, reflecting a 50% year-on-year increase.
Indications suggest that Chinese consumers ramped up their spending during the New Year holidays. Meituan, an online platform delivery service, disclosed that average daily consumer spending on its platforms surged by 36% compared to the same period last year. Although the actual consumption value was not provided, Meituan mentioned that it exceeded pre-Covid levels observed in 2019. Moreover, there was notable growth in restaurant spending during the initial five days of the Chinese New Year holidays, with a substantial surge of 161% in overall group order volume compared to the previous year.
Recent trends show a decline in consumer confidence in China due to the persistent property crisis and downturn in the stock market, leading to reduced sales of high-value items. Sales of passenger cars in China fell 26% in January from December, according to the country’s automakers’ trade group. Gary Ng, a senior economist at Natixis SA, emphasized the uncertainty surrounding the sustainability of the increased consumer spending during the new year holiday, questioning its ability to fully offset the shift in consumption away from durable goods and the downward trajectory observed among certain residents.