A Boost in Travel and Spending During China’s Lunar New Year Holiday
The Lunar New Year holiday in China has brought encouraging news for the country’s economy, with travel and spending reaching record levels. According to data released by the Ministry of Culture and Tourism, a total of 501 million trips were made within China during the eight-day travel season starting on January 28, marking a 5.9% increase compared to the previous year. Tourism spending also surged by 7%, reaching 677 billion yuan ($93 billion), a significant rise from the previous year.
The average daily spending per trip was calculated to be 168.9 yuan ($23.2), a modest increase from 166.8 yuan ($22.9) in the previous year. However, this figure remains about 5% lower than the pre-pandemic level of 176.9 yuan ($24.3) recorded in 2019. Despite this, the overall rise in travel and spending has provided a much-needed boost to China’s economy, which has been facing challenges in recent years.
Cross-Border Travel and Visa-Free Access
Cross-border travel also saw a notable increase during the Lunar New Year holiday. An average of 1.795 million daily trips were made into and out of China, slightly higher than the pre-pandemic average of 1.79 million daily trips in 2019. This increase was largely driven by foreign visitors, with their numbers rising by 22.9% compared to 2024.
China has been actively promoting tourism by rolling out visa-free access to dozens of countries over the past year. This move aims to attract more foreign visitors and stimulate consumption. Speaking at a press briefing, Chinese Foreign Ministry spokesperson Lin Jian expressed optimism about the growing number of foreign tourists visiting China. He noted that the number of foreign tourists during the holiday rose by 150% compared to 2024, citing third-party data. Jian also highlighted the growing global recognition of the Chinese New Year as a widely celebrated festival.
A Revival in Entertainment and Consumer Spending
After a disappointing 2024, Chinese holidaymakers returned to movie theaters during the Lunar New Year break, leading to a significant surge in box office revenues. According to data from the China Film Administration, a record-breaking 187 million people visited cinemas during the holiday, resulting in a box office revenue of 9.5 billion yuan ($1.32 billion), the highest ever recorded. The animated film “Nezha 2,” a sequel to the 2019 hit, topped the charts and became the highest-grossing film in Chinese history, as reported by state broadcaster CCTV.
This surge in entertainment spending is part of a broader trend of increased consumer activity during the holiday. Sectors such as household appliances, electronics, and inbound tourism also saw solid performance, driven by the holiday effect and government policy support. Analysts at Citi noted that these positive trends could indicate a gradual recovery in consumer and business sentiment, which has been subdued in recent years.
Economic Challenges and Government Policies
Despite the encouraging data from the Lunar New Year holiday, China’s economy continues to face significant challenges. The property sector, once a cornerstone of the country’s economic growth, is experiencing sharp downturns. Additionally, job insecurity among the younger generation remains a pressing issue.
To address these challenges, Chinese leader Xi Jinping has made “actively expanding domestic consumption” a top priority. The government has introduced a range of policies aimed at stimulating spending, including public subsidies and vouchers for cinema-goers, as well as trade-in programs for cars and household appliances. In January, the Finance Ministry allocated 81 billion yuan ($11.1 billion) for these programs, which include incentives for purchasing items like rice cookers and washing machines.
Analysts, however, remain cautious about whether the momentum from the Lunar New Year holiday can be sustained. HSBC consumer analysts noted that the positive holiday data might simply reflect a release of pent-up spending power after a weak 2024. They warned against reading too much into the short-term gains, as the underlying challenges facing the economy remain unresolved.
International Trade Tensions and China’s Response
While China is grappling with domestic economic issues, it is also facing external pressures, particularly from the United States. The Trump administration recently imposed a 10% tariff on all imports from China into the U.S., adding to the existing trade tensions between the two countries.
In response, Beijing announced a package of economic measures targeting the U.S., which will take effect next week. These measures include a 15% tax on certain types of coal and liquefied natural gas, as well as a 10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks.
During a State Council meeting, Chinese Premier Li Qiang emphasized the need to maintain confidence and coordinate efforts to address both domestic economic challenges and external pressures. He stressed the importance of staying resilient and proactive in the face of these dual challenges.
Overall, while the Lunar New Year holiday has provided a temporary boost to China’s economy, the road to sustainable growth remains fraught with challenges. The government’s efforts to stimulate domestic consumption and respond to external pressures will be critical in determining the trajectory of the economy in the coming months.
