Tourism in China picks up during the May Day holiday but travelers are frugal

Tourism in China picks up during the May Day holiday but travelers are frugal

China reported a surge in tourism during the recently concluded Labor Day holiday, but tourists cut their spending, in a sign that consumption in the world’s second-largest economy remains sluggish.

Tourists made a total of 295 million trips in mainland China during the five-day holiday, which ended on Sunday, the Ministry of Culture and Tourism said on Monday.

That’s 28% more than the number of trips taken during the Labor Day holiday period in 2019, which lasted just four days. A few months later, in 2020, the Covid-19 pandemic would strike China and the world, largely shutting down travel.

This year’s Labor Day tourism revenue was 166.89 billion yuan ($23.6 billion), only 13.5% higher than the 2019 level.

This means tourists are spending less money per trip than five years ago, as their average spending dropped 6% to 565.73 yuan ($80).

There is a similar pattern at the Chinese box office.

During the holiday period, 37.77 million people went to the movies, up from 35.09 million in 2019.

But ticket sales were close to 2019 levels, reaching 1.527 billion yuan ($215.7 million).

Chinese consumers have cut back on spending as the economy weakens and job prospects worsen. A record slump in real estate, which accounts for 70% of household wealth, weighed on consumer sentiment.

“[Chinese] consumer sentiment appears shaky based on sluggish retail sales spending momentum and a sharp reversal in April’s services PMI,” analysts from TD Securities said in a recent research note.

On Monday, the private sector survey showed that the Caixin/S&P Global services PMI fell to 52.5 in April from 52.7 the previous month.

The services sub-index under the government’s official non-manufacturing PMI also fell sharply to 50.3 in April from 52.4 in March, according to statistics released by the National Bureau of Statistics last week. It was the weakest reading since January.

In March, retail sales growth slowed to 3.1% from 5.5% in February. Consumer inflation rose by a muted 0.1% in March from a year earlier, down from 0.7% in February, which was the first increase in six months.