Staycationing Chinese Spend Less As Virus Concerns Linger
(Bloomberg) -- Even with Covid-19 almost completely under control across China, consumers were still reluctant to travel and spend during the just-finished holiday week, with concerns about possible virus outbreaks undercutting tourism consumption.
People in China made 515 million trips over the seven-day national holiday, according to Ministry of Culture and Tourism data released Thursday. That was 70.1% of the level during the same period before the pandemic, which usually means in 2019, and down 1.5% from the level in 2020.
The people who did travel spent less than before, with tourism revenue only at about 60% of the pre-pandemic level, and down 4.7% from last year, the data showed. Most trips were mainly made within provinces, with short trips being the mainstream, the ministry said.
The data suggest consumers are still wary of the risks of further coronavirus outbreaks, with a number of cities including Shenyang and Hefei asked people not to cross provincial borders during the holiday unless necessary. China’s policy of swiftly locking down whole cities or towns when cases do appear has trapped some tourists in holiday destinations before, and may have contributed to people’s cautious attitude to travel.
“Affected by the weather and the resurgence of the local outbreaks, the demand for medium and long-distance tourism has not been fully released,” the ministry said in a statement on its website.
The sporadic virus cases may have a long-term impact on “out-of-home consumption” such as tourism, Lian Ping, chief economist at Zhixin Investment, said in an interview with the Securities Daily. Policy makers should roll out more targeted measures to boost consumption as demand weakens, he said.
People spent 4.25 billion yuan ($659 million) on going to the cinema during the holiday as of 5 p.m. local time Thursday, lower than the 5.1 billion yuan during the same period in 2019 but higher than the 3.7 billion yuan in 2020, Xinhua News Agency reported, citing preliminary data from the government department in charge of films.
“The golden week data add downside risks to our below-consensus GDP growth forecasts and lend support to our call for a growth double dip in the near term,” Lu Ting, chief China economist at Nomura Holdings Inc. wrote in a note Friday. “We expect Beijing to ramp up its monetary and fiscal support, but these will likely be insufficient to reverse the ongoing growth downtrend.”
The holiday period is also a period when people usually buy homes, but that demand was also likely slower this year due to the turmoil in the housing market and tighter controls on lending. Major Chinese developers saw their sales plunge last month as China Evergrande Group sank deeper into crisis, putting more pressure on the government to limit the fallout.
That drop is also likely to undermine economic growth, hitting both retail sales and industrial output.
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With assistance from Bloomberg