BEIJING – People in China have passed the pandemic and gone out for travel, preliminary data for the Lunar New Year holiday event.
“Pent-up demand was released as many people rushed to beautiful places, watched fireworks shows and many went to restaurants and hotels,” Nomura chief economist Ting Lu said in a report on Thursday.
China’s Covid “outgoing wave” is quickly ending as official data shows a drop in infections, hospitalizations and deaths, he said. “China is fast reaching herd immunity to Covid, as the government estimates that around 80% of the population has been infected with Covid.”
The country saw a spike in Covid infections in December, when Beijing ended contact tracing and border controls for nearly three years. 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 bed and breakfasts have more than doubled from a year ago, while ticket sales for attractions have increased more than fivefold, according to Trip.com data for the first four days of the Lunar New Year.
The travel booking site said that during those four days, hotel reservations and other tourist activities exceeded levels seen during the same period in 2019, before the pandemic.
People in mainland China are also eager to travel abroad.
Flight bookings for travel from the mainland to overseas destinations during the first four days of the holiday quadrupled from a year ago, while related hotel reservations doubled, Trip.com said.
Travel vs. big-ticket spending
It is not clear whether the rise in tourism indicates consumption in China has recovered from the slump of the past three years. Retail sales are down 0.2% in 2022.
Domestic daily trips for the Lunar New Year holiday travel period so far – starting January 8 – are up about 50% from a year ago, according to the Transport Ministry.
But even the tens of millions of daily trips are still a significant drop from 2019 levels, the ministry said.
“Shopping mall foot traffic, new home purchases and car sales data show big-ticket consumption may be on the wane,” Nomura’s Lu said.
“Growth in retail sales of passenger cars in terms of volume dropped noticeably to -21.0% yoy during January 1-15 from 3.0% in December, after the end of the seven-month 50% purchase tax cut,” he said in the report.
Chinese households’ willingness to save reached a record high last year amid uncertainty about future incomes and a slump in the property market. A large portion of household wealth in China is in real estate.
For people in China who plan to spend more in physical stores this year, supermarkets rank highest, followed by convenience stores, according to a December Oliver Wyman survey. Shopping centers are cheaper.
However, sentiment can change quickly.
The study found that in just one week at the end of December, survey respondents became more comfortable going out.
“We think this is a very positive sign of resilience and how quickly consumer confidence will improve,” Oliver Wyman partner Imke Wouters said in a phone interview earlier this month. “Retail sales are directly linked to consumer confidence.”