Despite strong Lunar New Year holiday data, consumer spending in China has yet to rebound

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China recorded a record rise in travel and consumption over a longer period than usual Lunar New Year holiday seasonHe described the gains as signs of the recovery of the world's second-largest economy Thanks to the government's supportive policies.

But according to CNN calculations based on official data, average tourism-related spending per trip was below pre-pandemic levels, as consumer confidence remains weak amid deflationary pressures.

A total of 474 million trips were made within mainland China during the Year of the Dragon travel season, up 34% compared with the same holiday in 2023 and 19% higher than in 2019, according to data published by the Ministry of Culture and Tourism on Sunday. .

She added that domestic tourists' spending totaled 632.7 billion yuan (87.9 billion US dollars) during the holiday.

However, the most recent holiday season fell over an eight-day period from February 10 to February 18, which is one day longer than previous periods.

“Supported by various favorable factors such as government policies, [services] The ministry said in a statement, “In the display and propaganda work, people in urban and rural areas have shown an increasing desire to travel, with many indicators such as the number of trips and spending on travel reaching record high levels.”

This Lunar New Year period is the longest in modern history. Previously, the holiday lasted seven days. It was also the first holiday since 2019 to be completely unaffected by the impact of the COVID-19 pandemic.

The ministry did not provide details on the number of trips or daily spending. However, CNN calculations based on official data suggest that the level of consumption was below pre-pandemic levels.

On average, 59.25 million domestic trips were made per day during this holiday period, which is slightly lower than the 59.29 million trips per day in 2019.

An average of 166.85 yuan ($23.2) was spent per ride per day this year, down 6% from 176.9 yuan ($24.6) in 2019.

Travel outside mainland China, including to Hong Kong and Macau, was also below pre-pandemic levels, if official figures are averaged.

A daily average of 1.69 million trips were made to and from mainland China during the holiday, according to data provided on Sunday by the National Immigration Administration. The number was down 6% from the 2019 average of 1.79 million daily trips.

“Although we see some strength in the data, we urge market participants to be cautious,” Nomura analysts said in a note on Monday.

They added: “We maintain our view that the ongoing economic decline is likely to worsen in the spring.”

China's economy faces a myriad of challenges, including low confidence and deflationary pressures. In January, Consumer prices fell At the fastest pace in 15 years, recording a decline for the fourth month in a row.

However, there were some bright spots.

While consumption of expensive goods such as real estate remained sluggish, purchases of cheap goods boomed.

Movie ticket sales have arrived It is a record 8 billion yuan ($1.11 billion) during the eight-day holiday season, according to data released Sunday by the China Film Administration.

She added that the number of people who went to the cinema, which totaled 163 million, also set a record.

But box office spending on its own was not enough to allay analysts' concerns about growth this year.

Record decline in real estate. Accounting for up to 30% of GDP and 70% of household wealth, it has dealt a heavy blow to business and consumer confidence.

“The real estate sector remains the main impediment to economic growth,” said Frederic Neumann, chief Asia economist at HSBC.

“The decline in construction is weighing on investment, hurting industries from steel, glass and cement to construction equipment makers, plumbers and architects. At the same time, falling property prices are putting a drag on consumer spending as households feel their wealth declining.

During the holiday season, average daily new home sales in 25 major cities fell by 27% compared to last year, according to the latest data from China Index Holdings, a leading private real estate research firm.

Mixed economic data gave mainland Chinese markets a modest boost when they resumed trading on Monday after the holiday break, but the Hong Kong market, which has been trading since Wednesday, fell.

“Growth headwinds remain severe and it will take more than just an increase in holiday travel for market sentiment to recover,” Newman said. “In particular, investors are still looking for further stimulus to revive growth and are hoping for greater details on measures to stabilize the housing sector.”

The Shanghai Composite Index and Shenzhen Composite Index rose 1.6% and 0.9%, respectively, on their first trading day in the Year of the Dragon.

However, Hong Kong's Hang Seng Index fell 1% and was on the verge of reversing three straight days of gains.

Chinese stock markets suffered Long-term stagnation Since the last peak in 2021, with more than $6 trillion in market capitalization wiped out of the Shanghai, Shenzhen and Hong Kong markets.