Consumer spending in China shows signs of recovering from the low levels seen during the peak of the coronavirus pandemic, but remains subdued, the latest data shows.
Spending during the first part of the country’s National Day Golden Week, between October 1 and 7 – traditionally an annual spree of shopping and travel – was down by almost a third compared to the same period last year, the https://www.scmp.com/economy/china-economy/article/3104191/china-holiday-spending-improves-may-still-third-below-last" target="_blank">South China Morning Post reports. This year’s holiday overlaps with the Mid-Autumn Festival – a time for family gatherings – which makes the holiday eight days long in total.
Some 425 million Chinese were on the move between Thursday and Sunday, the Ministry of Culture and Tourism said, representing a decline from 542 million last year. Spending over the same period was around $45.9 billion, down 31% on the same four days in 2019.
The state-owned broadcaster, CGTN, paints a more upbeat version of the National Day holiday, describing a “booming” Golden Week with long queues returning at scenic spots, restaurants and for taxis. In Changsha, in Hunan Province, it reports, some restaurants saw 4,000 people queuing for dinner.
The SCMP’s Political Economy Editor Zhou Xin, however, takes the view that beneath the official narrative of “exuberance and prosperity” all is far from well in the world’s second-largest economy. While the worst of the economic effects of the pandemic may be over for China, and there are indications of a partial resurgence in spending, the numbers “reflect a trend that consumers are increasingly concentrating their spending, partly thanks to the popularity of online recommendations”. And the big picture is that Chinese consumer spending remains weak, Zhou says.
In the luxury sector, the big question for brands, argues Jing Daily, is how long lasting the effects of global travel restrictions will be; domestic tourism is seeing a strong boost post-lockdown, and if this creates a change in attitudes towards foreign travel, it will mean the sector will rapidly need to adapt. “Luxury brands need to brace for the likelihood that outbound travel – and, therefore, outbound retail – still won’t be a reality.” The consequence of this, Jing Daily says, is not how worried luxury brands should be, but “how they can keep pivoting to connect with China’s consumers at home”.
Meanwhile, in Hong Kong, the holiday boost was virtually non-existent as mandatory 14-day quarantine restrictions for all visitors to the territory deterred mainland tourists. According to one estimate, Hong Kong missed out on at least US$292 million in tourism revenue, as visitor numbers fell by 99.8%.
But, despite what appears to be largely sombre economic news out of China, the country stands in stark contrast to most of the rest of the world, where things are a great deal worse.
As Bloomberg reports, the number of people on the move in China during Golden Week still represents 80% of last year’s number. Whereas, globally, the tourism sector is expected to see a loss of some $1.2 trillion in revenue this year. And, the OECD forecasts the Chinese economy will grow by 1.8% in 2020, which makes China the only economy in the G20 that is set to show any growth. In contrast, the US economy is set to shrink by 3.8%, and the Eurozone by 7.9%.
Sourced from South China Morning Post, CGTN, Jing Daily, Yahoo! News, Bloomberg; additional content by WARC staff