This year’s Chinese New Year holiday period saw both an 8.2% increase in domestic travel, and an 8.6% increase in consumer spending compared to the year before, according to official figures. The holiday for this year was increased from eight to nine days, and a range of stimulus policies were implemented by the Ministry of Commerce to boost spending.
Boosting consumption has been earmarked as a key priority in Beijing’s current Five-Year Plan, and the New Year has started with signs of what may be positive momentum. That said, subsidies are only a short-term solution which runs the risk of front-loading spending. As we have seen in the past, the subsequent removal of subsidies will reduce drastically the amount of purchases made.
The longer holiday perhaps encouraged more people to travel, but the overall impression is that people traveling for whatever reason are spending much less than they used to. But the holiday period is over now, and China is getting back to work and to reality. It’s going to be a tough year.