China’s Lunar New Year Holiday Sees Strong Travel Activity and Spending
Visitors near Yuyuan Bazaar in Shanghai, China, on Sunday, Feb. 11, 2024.
Raul Ariano | Bloomberg | Getty Images
Travel Activity Jumps Above Pre-Pandemic Levels
China’s travel activity and spending jumped above pre-pandemic levels during the Lunar New Year holiday, signaling an improvement in consumption in the world’s second-largest economy.
According to data released by the country’s Ministry of Culture and Tourism, a total of 474 million domestic trips were made during the eight-day festival, representing a significant 34.3% jump from the previous year.
This surge in travel activity during the holiday period indicates the resilience and recovery of the Chinese economy as the impact of the pandemic wanes.
Rise in Domestic Tourism Spending
Tourists spent nearly 632.7 billion yuan ($87.95 billion) on domestic holiday trips, reflecting a remarkable 47.3% year-over-year increase in spending.
China Central Television reported that domestic trips recorded a 19% rise compared to the same period in 2019, while spending rose by 7.7%.
This surge in domestic spending showcases the strengthening consumer confidence and the country’s efforts to stimulate domestic consumption in the face of deflationary pressures.
Recovery and Uncertainties
The resumption of mutual visa-free travel with certain countries contributed to the recovery in both outbound and inbound travel during the Lunar New Year holidays.
However, the sustainability of this travel surge remains uncertain as revenue per trip still lags behind pre-pandemic levels.
Market analysts caution that while the strong year-over-year growth rates are encouraging, they are partly influenced by last year’s low base during the height of the Covid pandemic.
Implications for the Chinese Economy
China’s stock market resumed trading on a positive note after the week-long Lunar New Year closure, with the tourism sector leading the rise.
Market participants are closely monitoring Chinese policymakers for potential stimulus measures to support the economy and further boost consumer spending.
The performance of the U.S. Federal Reserve’s monetary policy is also a key consideration for China, as it could impact the Chinese yuan and limit Beijing’s policy choices.
Furthermore, China has been encouraging banks and local businesses to accept foreign bank cards, indicating efforts to facilitate mobile payments for international visitors.
— Contributions by CNBC’s Evelyn Cheng and Clement Tan
