China was hoping for a Golden Week consumption boom. It didn’t happen

By Laura He, CNN

Hong Kong (CNN) — China has concluded its Golden Week holiday on a muted note, with key travel and spending data showing weaker-than-expected recovery in consumption amid a wider economic slump.

A total of 826 million trips were made in mainland China during the eight days to October 6, which was up 4.1% from the comparable period in 2019 before the pandemic, when Beijing imposed strict lockdowns and draconian travel curbs, according to data released by the Ministry of Culture and Tourism Saturday.

Spending by tourists in the country grew 1.5% from the 2019 level to 753.43 billion yuan ($103 billion).

But both increases fell short of government forecasts. Before the holiday, the ministry had expected domestic travel to hit 896 million trips, and tourism spending to reach 782.5 billion yuan ($107 billion).

Travel to and from mainland China also disappointed.

According to the National Immigration Administration, on average 1.48 million people crossed the border every day during the Golden Week holiday. The figure was just 85.1% of the volume recorded in 2019 and lower than the 1.58 million forecast by the body previously.

The tourism data “suggest the services recovery has decelerated,” Goldman Sachs analysts said Sunday, but added that a recovery was still underway.

“We believe additional policy easing will be necessary for further recovery in consumption and services, especially given the continued property downturn and still-dampened confidence.”

Data from Alipay, China’s largest payment app with over 700 million active monthly users, showed that the number of outbound travelers using its payment services amounted to only 80% of the level in 2019. Average spending per person increased slightly, to 105% of the 2019 level.

Beijing has been hoping that a wave of “revenge spending” would prop up economic growth, after Chinese consumers emerged from three years of pandemic restrictions in December.

Tourism-dependent businesses around the world are also eying the return of Chinese visitors, who were the highest-spending travelers before the pandemic. But the pace of the recovery in China’s consumption sector has been disappointing.

Citi analysts attributed the weaker-than-expected rebound in travel to the dissipation of “pent-up demand,” weakening spending power amid economic slowdown and changing patterns of travel.

For instance, two trends, especially popular with younger travelers this holiday season, included a form of “reverse tourism” to destinations that are off the beaten track, and exploring places such as farmers’ markets as part of “city walks.”

The trends indicated that travelers are in pursuit of “high-quality” experiences rather than traditional sightseeing with crowds of people, Citi analysts said.

Outbound travel has been gaining momentum, with the steady resumption of group tours and increases in flight capacity.

But demand for overseas travel is likely to be constrained by visa issuance restrictions and a depreciation of the Chinese currency, which makes international trips more expensive, the analysts added.

Weakness at the box office

China’s box office hit multi-year lows during the holiday week.

Sales of movie tickets reached only 2.7 billion yuan ($370 million) during the break, down 39% from the level in 2019, according to data from online ticketing platform Maoyan Entertainment, which is backed by Tencent.

It was the second-lowest box office in the past five years, ahead only of 2022 when widespread Covid lockdowns shut most of the country’s cinemas for months.

The surprisingly soft takings followed a record-breaking summer when China’s box office hit an all-time high during the period between June 1 and August 31. A number of blockbusters drove many young, female moviegoers to the cinema.

The disappointing Golden Week sales were primarily due to “softer-than-expected” movie content and the fact that many people were traveling rather than heading to theaters, Citi analysts said.

A recovery in domestic consumption not related to the Golden Week also fell short of expectations.

Tesla sold 74,073 China-made electric vehicles in September, down 10.9% from a year earlier, according to data released by the China Passenger Car Association Sunday. The figure was 12% lower than in August.

Among those vehicles, about 44,000 were sold domestically, which represented a drop of 43% from a year ago and a fall of 32% from the previous month, according to CNN calculations based on the CPCA data.

Tesla was the second-best-selling EV brand in September, behind BYD.

Overall, EV sales slowed in China last month, the CPCA said, with growth decelerating to 23% compared with a year earlier from 26% in August.

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