HONG KONG, Oct 11 (SCMP): A surge in spending over China’s “golden week” holiday has highlighted an encouraging rebound in consumption after the coronavirus pandemic ravaged the economy early in the year.
During this year’s eight-day holiday, which combined National Day and the Mid-Autumn Festival, retail and restaurant sales reached 1.6 trillion yuan (US$235.5 billion), with daily sales up 4.9 per cent compared to last year’s seven-day holiday, the Ministry of Commerce said.
China UnionPay, the country’s largest payment processing scheme, reported that transactions during the first seven days of the holiday rose 6.3 per cent from a year earlier to 2.16 trillion yuan. On October 1, daily transactions surpassed 33 million yuan, up 16 per cent from a year earlier.
In the southern province of Hainan, sales in duty-free shops reached 10.4 trillion yuan, more than doubling from a year earlier.
More than 146,800 tourists flocked to the tropical island’s stores over the holiday after the government raised the annual duty-free shopping allowance from 30,000 yuan to 100,000 yuan earlier this year.
China’s strong holiday spending indicated that retail sales could rise by 3 to 4 per cent in October from a year earlier, said Larry Hu, chief China economist from Macquarie Group, after sales hit positive territory for the first time in August, growing 0.5 per cent. September’s retail sales data will be released later this month.
The rebound in spending will be a confidence booster for the world’s second largest economy, which is rolling out a new “dual circulation” economic strategy that focuses on bolstering domestic demand to offset an increasingly uncertain international environment.
China’s recovery from the pandemic has until recently been supported by state-led investment in infrastructure and property.
“The message from golden week is important because the recovery in the coming months has to be driven by consumption,” Hu said. “The V-shaped recovery so far has been largely driven by property, infrastructure and exports, which are 50 per cent of the economy. Given the recent policy turns, their growth rates might peak soon, or have already peaked.
“It’s encouraging that the other half of the economy, including consumption and manufacturing investment, is catching up.”
Domestic tourism also picked up over the holiday, albeit at a level below last year.
Some 637 million people travelled across the country, generating tourism revenue of 466.5 billion yuan. Tourist numbers were down nearly 21 per cent from a year earlier, with spending down 30 per cent, according to the Ministry of Culture and Tourism.
The number of people travelling by road over the holiday period plunged 31 per cent from a year earlier to 47.3 million, while the volume of daily airline passengers fell 9 per cent year on year, data from transport ministry showed.
“The encouraging numbers are biased by the fact people can’t travel abroad,” Hu said. “That said, it’s clear that consumption, especially service consumption, is on the mend.”
The consumption rebound was helped by strong box office sales during golden week, with theatres grossing 3.9 billion yuan in eight days, the second highest total during the October holiday period in history.
Meituan Dianping, one of China’s largest food delivery platforms, reported that over the first four days of this month, in-store orders at restaurants increased by 78.4 per cent compared to the first four days of Labour Day in May, while hotel bookings doubled. - South China Morning Post
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