China's Golden Week reveals cautious consumer spending despite travel surge
Chinese visitors are returning from trips after the 13-day Golden Week holiday. Their subdued spending has raised fresh questions about domestic demand in the world's second-largest economy.
The recent Golden Week holiday in China saw a surge in travel, with 31.19 million passengers journeying during the 13-day period following the Mid-Autumn Festival and National Day. However, consumer spending among travelers remained cautious. Mid-20s traveler Ya Xi admitted she was spending less this year and allocated a 200-yuan budget for each meal.
Despite a record-breaking 25.204 million railway passenger trips on October 1, early data suggested more moderate spending and flat passenger traffic per traveler. Citigroup analysts noted a mere 0.1% increase in traffic volume during the holiday's first four days, significantly lower than the 3.5% increase during the Labor Day vacation.
China's economy is frequently monitored through Golden Week as a gauge of consumer spending power. State media reported robust numbers, yet early indications indicated more restrained spending. Chinese consumer behavior is becoming increasingly selective, with Lizzi C. Lee of the Asia Society Policy Institute stating that people are willing to spend but being very careful about how much and what they spend.
Budget travel is on the rise among Chinese visitors, though consumption remains strained. The Chinese government attempted to stimulate Golden Week spending with coupons worth over 310 million yuan, a tactic deemed ineffective by Wang, an associate research fellow at the Chung-Hua Institution for Economic Research. The wealth gap in Chinese society remains a fundamental issue, contributing to weak domestic demand since the property market correction began during the pandemic.
Despite tightened travel restrictions, overseas tourism numbers are still growing, providing a reality check for Beijing's concerns.
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