China’s Tourist Spots Are Full, but Wallets Are Still Light
China’s consumers are slogging back toward normalcy, but weak holiday spending shows the recovery is far from complete
Chinese tourist spots are crowded with visitors again as the pandemic is largely under control in the country. A full recovery of consumption, however, may still take a while.
During the first half of Golden Week, an eight-day holiday that began last Thursday, 425 million trips were made across China, generating about 312 billion yuan, equivalent to $46 billion, of revenue, according to official data. That was a strong pick up from May, when only 115 million trips were made in the five-day Labor Day holiday. Most travel restrictions are eased now as mainland China hasn’t reported a locally transmitted case since August. With international travel more or less nonexistent, discounts and offers from travel apps and scenic spots have lured visitors to travel within the country.
Yet travel spending is still way off from last year. Tourism revenue during the first half of Golden Week was down 31% from the same period in 2019. Partly that’s because some social-distancing measures like visitor caps in tourist attractions are still in place, but spending per trip was also down 12%, indicating consumers are still cautious.
Unlike many developed economies, China hasn’t provided massive income support to households, but has instead focused on stimulating investment and keeping businesses afloat. China’s initial recovery was focused on manufacturing and exports, which has started to pull consumers up too lately. But retail sales still lag behind overall growth.
Spending from the lowest earners in China, in particular, could take a longer time to catch up. They were among the worst hit during the outbreak, as many of them were employed in “close-contact” sectors like restaurants and retail. Nearly three-quarters of China’s 83 million individually-run businesses were in the three hardest hit close-contact sectors, according to Nomura. The impressive recovery in travel is encouraging, but the fact that actual spending is still well below pre-pandemic levels shows consumers are still far from out of the woods.
Putting the pandemic under control is essential for consumers to start spending again, but getting all the way back to normal will be a longer journey—even in China.