China tourism rebounds over Golden Week but still below last year

By Andrew Galbraith and Sophie Yu
SHANGHAI / BEIJING (Reuters) - Domestic tourism in China rebounded sharply on the Golden Week vacation that just ended, fueled by the country's success in fighting the novel coronavirus, although levels were still well below last year's.
During the eight-day national holiday, which began on October 1, 637 million local tourists visited tourism spots, 79% of the previous year's total, the Chinese Ministry of Culture and Tourism said in a statement on Thursday.
Domestic tourism revenue was 466.56 billion yuan (US $ 68.7 billion) compared to nearly 650 billion yuan a year earlier.
However, this was an improvement on China's last long Labor Day vacation, May 1-5, when 115 million local tourists traveled and tourism revenue was only 47.56 billion yuan.
Since then, COVID-19 cases have decreased and there have been no new transmissions in mainland China since early August.
"The rapid recovery may have eased concerns about China's growth momentum, but it's too early to be complacent," wrote Betty Wang, ANZ's senior China economist, in a note.
October's Golden Week numbers lagged year-on-year, despite the fact that the holiday season this year was extended by one day as it overlapped with China's Mid-Autumn Festival.
The numbers also contradicted some expectations that domestic tourism would be much stronger with cross-border travel restrictions and a lack of international flights preventing millions of Chinese nationals from traveling abroad.
"Tourism revenue only rebounded to 69.9% yoy during the holiday season," Wang said, noting that core inflation fell to 0.5% yoy in July and August, its lowest level since 2010.
The weak CPI growth suggests that domestic demand remains fragile.
"We haven't seen a so-called rise in retaliation (in consumption)," said Zhang Qidi, visiting researcher at the Center of International Finance Studies at the Central University of Finance Studies in Beijing.
Zhang does not expect consumer spending to grow strongly in the short term and notes that middle- and low-income households have been hit by the economic fallout from the pandemic.
Household income declined 1.3% year-on-year at the end of June, up from a 5.8% increase at the end of December, according to official figures.
"It will be a long time before income growth returns to normal," said Zhang.
Separate data from the Department of Commerce showed that average daily sales at major retail and catering companies increased 4.9% year over year. Sales were 1.6 trillion yuan ($ 238 billion).
Auto sales grew strongly in some regions of the country, with sales in Beijing increasing 23.5%.
Car trips played a prominent role this year, according to state media, which contributed to the congestion on the freeways and also indicated that caution should still be exercised with coronavirus transmissions and outbreaks.
($ 1 = 6.7898 Chinese Yuan)

(Reporting by Andrew Galbraith, Sophie Yu and Ryan Woo; Editing by Edwina Gibbs)

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