China’s Golden Week spending drops to seven-year low as zero-Covid beats economy

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China’s Golden Week holiday spending falls to seven-year low, overall Vibrant roadside discourages people from traveling or spending, while Dark economic outlook further erode consumer confidence.

Spending by tourists during the week-long holiday beginning on October 1 fell 26% to 287.2 billion yuan ($40.4 billion) year-on-year, according to data. from the Ministry of Culture and Tourism on Friday. That is the lowest number since 2014 and less than half the pre-pandemic level in 2019, according to government statistics from previous years.

The National Day holiday is one of China’s longest public holidays and is usually a peak season for travel and spending.

But this year, people have been prevented from traveling by the resurgence of the virus and strict Covid restrictions. Lockdown and other control measures have been stepped up in recent weeks, including in some popular tourist destinations. Consumer sentiment has also been affected by the intensifying economic crisis, which is mainly the result of Beijing’s ongoing zero-Covid policy and the deepening slump in the property market. produce.

Visitors view paintings of rice fields at an agricultural demonstration area during the National Day holiday on October 2, 2022 in Harbin, Heilongjiang province, China.

“The holiday soft data package is hardly surprising given the new Covid outbreak and tighter containment measures ahead of the Party Congress,” Citi analysts in a research note on Sunday said. Leader Xi Jinping is widely expected to break with tradition and be appointed to a third term in power.

China is the last major economy in the world that still enforces strict zero-Covid measures, which aim to eliminate chains of transmission through border restrictions, mass testing, widespread quarantine. and uncompromising fast locking.

The ruling Communist Party has used a zero-Covid strategy to argue that its political model is superior to Western democracies, and that Mr. Xi has ignored the policy.

For local officials, doubling down on zero-Covid is a way to bolster the Party line, demonstrate their loyalty to Mr. Xi, and prevent any large-scale outbreaks that could lead to an outbreak. could jeopardize their careers a few weeks before the Party Congress.

Just this month, the entire Xinjiang region, home to 22 million people, banned all residents from leaving its borders, just weeks after it began easing restrictions from a lockdown. strictly stretched. While last week, hundreds of travelers were stranded at an airport in the southwestern province of Yunnan after authorities imposed a swift lockdown.

Due to limitations, some inside China called this year’s holiday “the bleakest Golden Week ever” as people grew weary of three years of Covid restrictions, choosing instead to stay home rather than risk being locked out surprise.

Only 422 million trips were made during the holiday this year, down 18% from last year, according to the Ministry of Culture and Tourism. The number of trips is the smallest since 2014 and is far from recovering to pre-pandemic levels.

Airfares are the cheapest in five years, averaging 650 yuan ($91) per domestic trip, data from Qunar, a Chinese online travel agency, shows.

And it’s not just tourism that comes down. According to the China Film Administration, box office revenue plummeted 66% to 1.5 billion yuan ($211 million) year-on-year. That’s just a third of ticket sales for the same period in 2019.

State media outlets attribute that to a lack of film options, as most of the releases are propaganda or animated. “No blockbusters or imported movies,” said state-run operator Southern Metropolis Daily.

New home sales also fell 38% during Golden Week in 21 key cities, year-on-year, according to private research firm China Real Estate Industry.

All of the weak data points to the devastating effect of the zero-Covid policy on consumer spending and Beijing’s economy, analysts said.

“The resurgence of Covid and the risk of closures discourages consumption and tourism,” said Ken Cheung, Asia chief forex strategist at Mizuho Bank.

He added: “Clearly, the zero-Covid policy is putting the economy under a lot of pressure and market participants will be scrutinizing any signal of a policy adjustment following the leadership reform. leadership at the upcoming 20th Party Congress”.

An aerial photo taken on October 3, 2022 shows tourists visiting a historical and cultural district in Rugao city, Jiangsu province, China.

Separately, a key private survey showed Saturday that China’s services giant contracted in September for the first time in five months.

According to a statement by S&P Global Ratings, Caixin’s services purchasing managers index, which focuses on small and medium-sized enterprises in China’s service industry, fell to 49.3 last month from 55 in October. 8, according to a statement by S&P Global Ratings. This is the index’s first drop since May. A reading below 50 indicates a contraction.

Efforts to limit the spread of Covid across China have resulted in a fresh decline in service sector activity, disrupting business operations and restricting travel, the statement said.

In particular, employment continued to decline. The employment index remained in contraction territory for the ninth straight month and hit its lowest level since May.

China’s service sector is a key source of employment, accounting for 48% of all jobs created, according to government data. It also has the largest number of youth employed, mainly in restaurants and other food services.

“The market is much less optimistic,” said Wang Zhe, senior economist at Caixin Insight Group.

The survey also showed that companies’ expectations for future operations recorded the lowest reading in six months and the second lowest since August 2020.

“Business concerns continue to stem from the reoccurring Covid outbreak and the impact of market-related controls,” said Wang.

CNN’s Nectar Gan contributed to this report.


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