(Bloomberg) -- Chinese consumption edged up slightly during a major holiday this week from its pre-pandemic level, a rebound that didn’t sway investors still fixated on the extent of the country’s deepening economic woes.
Total spending by domestic tourists during the three-day Mid-Autumn festival rose 8% from 2019 to 51 billion yuan ($7.2 billion), the Ministry of Culture and Tourism said Wednesday. The number of trips increased 6.3% to 107 million, according to its statement.
When measured per trip, spending amounted to just 477 yuan, up 1.6% from five years ago, according to Bloomberg calculations based on the ministry’s data.
The fragility of the consumer economy is playing out in the equities market. Chinese travel and shopping-related shares fell on Wednesday, with tour operator Yunnan Tourism Co. dropping by the most in over a month.
Restraint by consumers during a major holiday is a measure of the challenges facing an economy beset by worsening unemployment and a property slump that’s ravaged household wealth.
The meager per-trip increase “doesn’t point to a recovery in consumption,” according to Zhaopeng Xing, a senior strategist at Australia & New Zealand Banking Group, who expects a drop in daily spending during the upcoming Golden Week compared with September’s break.
“The spending figures have been extremely volatile over the past five years with wealth effects due to drops in property and stock prices disrupting the normal pace of consumption,” he said.
Pessimism is spreading among economists that China will struggle to meet its around 5% target for economic expansion this year as domestic demand stays stubbornly subdued. Retail sales gained just 3.4% on year in the first eight months of 2024, less than half the growth seen in the same period in 2023, official data showed.
What Bloomberg Economics Says...
“Without a consumer revival, growth drivers will remain unbalanced — with policymakers having to continue to do the heavy lifting.”
— Chang Shu, chief Asia economist, and David Qu, economist. For full analysis, click here
The average number of cross-region trips each day during the break that ended Tuesday notched an estimated increase of 28% on year, state broadcaster China Central Television reported, citing the Ministry of Transport. The figures were probably skewed at least in part by widespread flight cancellations after the strongest typhoon in more than seven decades struck Shanghai and some other cities.
Box office revenue in the three days reached 389 million yuan, compared with 367 million yuan in 2023, the Xinhua News Agency reported, citing data released by the China Film Administration.
TS Lombard economists Freya Beamish and Rory Green said they’ve “never been more worried about Chinese growth.”
“Policymakers have chosen demand deflation,” they said in a report on Wednesday. “The mass attempt to deleverage by saving is generating deflation, which is killing profits and crushing wages.”
--With assistance from Zhu Lin.
(Updates with economist comments in final two paragraphs.)
©2024 Bloomberg L.P.
