BEIJING — People in China move past the pandemic and travel, preliminary data for the Lunar New Year holiday show.
“The pent-up demand is being released as many people rush to scenic spots, watch fireworks displays, and barge into restaurants and hotels,” Ting Lu, Nomura’s chief economist, said in a report Thursday.
China’s Covid ‘exit wave’ is rapidly coming to an end as official data shows a decline in infections, hospitalizations and deaths, he said. “China has quickly reached herd immunity as the government estimates that about 80% of the population is already infected with Covid.”
The country saw a surge in Covid infections in December, just as Beijing ended nearly three years of strict contact tracing and border controls. The seven-day Lunar New Year, which officially began on Saturday, is the first major holiday since the end of China’s Covid restrictions.
In the country, reservations for overnight bed and breakfasts have more than doubled from a year ago, while ticket sales for attractions have more than quintupled, according to Trip.com data for the first four days of the lunar new year.
The travel booking site claimed that during those four days, reservations for hotels and other tourism activities were higher than during the same period in 2019, before the pandemic.
People in mainland China were also eager to travel abroad.
Flight bookings for travel from the mainland to overseas destinations during the first four days of the holiday have quadrupled from a year ago, while related hotel reservations have doubled, according to Trip.com.
Travel versus big expenses
It is less clear whether the increase in tourism implies that consumption in China is well on track to recover from the slump of the past three years. Retail sales fell 0.2% in 2022.
Domestic daily trips for the Lunar New Year holiday season have so far – since January 8 – increased by about 50% from a year ago, according to the Transport Ministry.
But even the tens of millions of trips per day are still sharply down from 2019 levels, the ministry said.
“Retail shoppers, new home purchases and auto sales data suggest big ticket consumption may remain subdued,” said Lu van Nomura.
“Growth in volume passenger car sales fell noticeably from 3.0% in December to -21.0% yoy between January 1 and 15, after ending the seven-month purchase tax cut of 50%,” said he in the report.
Chinese households’ propensity to save reached a record high last year amid uncertainty about future income and a slump in the real estate market. The bulk of household wealth in China is in real estate.
For people in China planning to spend more in brick-and-mortar stores this year, supermarkets are at the top, followed by convenience stores, according to a survey by Oliver Wyman in December. Shopping centers scored lower.
However, sentiment can quickly turn.
The study found that survey respondents became significantly more comfortable with the car within just a week at the end of December.
“We think this is a very positive sign of resilience and how quickly consumer confidence will improve,” said Oliver Wyman partner Imke Wouters in a telephone interview earlier this month. “Retail sales are directly linked to consumer confidence.”