(Bloomberg) -- Chinese tourists shelled out less money during their long holiday that ended Monday than before the pandemic, even as signs emerged that spending is stabilizing after a barrage of stimulus recently unveiled by the government.
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While travelers made 10.2% more trips during the Golden Week break than in 2019, spending only increased by 7.9%, according to data released by Ministry of Culture and Tourism. That means per-trip expenditure actually dropped 2.1% from five years earlier, according to Bloomberg calculations based on the ministry’s figures.
Even so, daily spending averaged about 131 yuan ($18.6) per trip, up from 113 yuan during the five-day Labor Day holiday in May.
“Low tourism spending per head and subdued services prices highlighted still weak domestic demand and continued consumption downgrading,” Goldman Sachs Group Inc. economists including Lisheng Wang said in a note.
It’s the first snapshot of how the measures announced by the government right before the break are feeding through to consumer confidence, after months of piecemeal efforts failed to stem an economic slowdown. The stimulus package powered a world-beating rally in Chinese stocks, despite concerns that more needs to be done to ensure demand will continue to recover.
“The stock market rally and trade-in scheme probably helped support consumer sentiment, but it remains to be seen if that can be sustained,” said Michelle Lam, Greater China economist at Societe Generale. “You need a recovery in the labor market and stabilizing house prices ultimately.”
Stimulus Package
Policies announced by the authorities in late September ranged from interest-rate cuts to rare cash handouts and steps to prop up the property and stock markets. But they offered little in the way of fiscal support and showed a lack of decisive action to address unemployment or put a floor under a property market downturn.
While vowing to speed up infrastructure spending, officials from China’s top economic planning agency on Tuesday also stopped short of unleashing greater stimulus. The meeting held by the National Development and Reform Commission proved a disappointment to investors looking for more fuel for the stocks rally.
Lam said expectations prior to the NDRC briefing were “too high” since fiscal stimulus is outside the agency’s remit. “Policymakers want a sustainable bull market, not a repeat of 2015’s episode,” she said, urging investors to be “patient.”
In another tentative sign of stronger consumer sentiment, retail sales during the National Day holiday rose 9% from the same period in 2023, the official Xinhua news agency reported Tuesday, citing data from the State Taxation Administration.
The average number of cross-region trips each day during the break increased 3.9% on year, Xinhua said in a separate report that referenced data from the Ministry of Transportation.
Mainland visitors also stepped up travel to Hong Kong during this year’s break compared to the same period in 2023. About 170,000 mainland visitors entered the city on average every day, up 27% from last year, the government of the financial hub said.
The key to boosting sentiment is fiscal policy support, said Duncan Wrigley, chief China economist of Pantheon Macroeconomics.
“The pattern since reopening has been stronger consumption during holidays, only to fade afterwards,” he said. “This time might be different with the change in policy tone, but only as long as China follows up with fiscal policies to nurture the fragile improvement in sentiment. “
(Updates with number of mainland visitors to Hong Kong.)
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