China Reports Record Breaking Holiday Travel Rates For Lunar New Year 

China has reported a record breaking increase in travel and spending during this year’s Lunar New Year holiday season, which could mean great things for the world’s second largest economy.

Embed from Getty Images

This year’s Lunar New Year holiday season in China has been celebrated for longer than usual, with a record breaking increase in travel and consumption during the festivities, according to reports.

CNN reported that their calculations showed the average tourism-related spending per trip was still below pre-pandemic levels, however, the influx of travelers was a good sign for potential economic growth. 474 million trips were made within mainland China during this year’s Lunar New Year travel season. This is a 34% increase when compared to last year and is a 19% increase from 2019’s numbers before the pandemic, according to data from the Ministry of Culture and Tourism. 

The Ministry stated that total spending from domestic tourists reached about 632.7 billion yuan ($87.9 billion) during the celebration period. This holiday season also took place over eight days in February (February 10th to the 18th) which is one more day than previous celebrations.

“Supported by various favorable factors such as government policies, [services] supply, and propaganda work, people in urban and rural areas have exhibited a rising willingness to travel, with many indicators such as the number of trips and travel spending hitting record high levels.”

In recent years, the Lunar New Year has only lasted about seven days. This year’s celebrations also mark the first time since 2019 that the holiday was completely unaffected by the Covid-19 pandemic. Analysis from Laurua He and Marc Stewart of CNN, however, showed that economic consumption levels were still lower than pre-pandemic levels. 

They wrote: “On average, 59.25 million domestic trips per day were made during this holiday period, slightly lower than the 59.29 million trips per day taken in 2019. An average of 166.85 yuan ($23.2) per trip per day was spent this year, down 6% from 2019s 176.9 yuan ($24.6).”

Traveling to destinations outside of mainland China was also below pre-pandemic levels. According to data from the National Immigration Administration, there was a daily average of 1.69 million trips made into and out of mainland China during the Lunar New Year; a 6% decrease from 2019’s average, which was about 1.79 million.

Nomura, a global financial services group, had its analysts report on this data and what it could mean for China’s economy as a whole.

Embed from Getty Images

“Although we do see some strength in the data, we urge market participants to exercise caution. We maintain our view that the ongoing economic dip is likely to worsen into the spring.”

Embed from Getty Images

China’s economy is currently facing a lot of issues, and in January, consumer prices fell at their fastest pace in 15 years, it also marked a fourth consecutive month of overall decline. One of the biggest industries impacting the economic downturn in China is real estate. Real estate accounts for up to 30% of gross domestic product and 70% of household wealth. 

“The property sector remains the main drag on economic growth. Falling construction is weighing on investment, hurting industries from steel, glass and cement to construction equipment makers, plumbers, and architects. At the same time, declining property prices are a drag on consumer spending as households sense a fall in their wealth,” said Frederic Neumann, chief Asia economist at HSBC.

According to recent data from China Index Holdings, during the holiday season average daily new home sales in 25 major cities declined by 27% when compared to the rates last year. 

“The headwinds to growth remain severe and it will take more than a bump in holiday travel for market sentiment to recover. In particular, investors are still looking for more stimulus to revive growth and are hoping for greater details around housing sector stabilization measures,” said Neumann.