Big-spending crowds have returned to malls, precincts and tourist attractions across China a month after Beijing lifted a domestic travel ban introduced in February to limit the spread of Covid-19.
The much-anticipated reopening of domestic travel and tourism has scooped airlines and retailers out of financial straits when consumers, with nowhere else to go after international travel is halted, choose to spend at home.
Millions of urbanites in Beijing, Shanghai, Guangzhou and Shenzhen are desperate for a ticket out of their home cities, even though their planned getaways to Hawaii or Hokkaido this summer have been replaced by short hops to domestic destinations like Hainan.
Travel and booking portals Ctrip and Qunar say they have largely clawed back lost business with trip and hotel bookings bouncing back to pre-Covid levels since August, a traditional bumper period for travel.
Data from Qunar, popular among travelers with search engine Baidu as its key investor, reveals that tickets of routes between Shanghai, Guangzhou and Hainan during September and the upcoming National Day golden week holidays had been snapped up. The travel portal told Xinhua that based on its booking and reservation data, China’s domestic air travel, once decimated by Covid-19, has recovered to roughly 90% of the level a year ago.
July statistics from China’s Civil Aviation Administration also show major carriers including Air China, China Southern and China Eastern flying much fuller planes on domestic routes, with average passenger load rates climbing back to 82% last month.
Beaches and resorts on the tropical resort island of Hainan are buzzing with holidaymakers from across the country. The four duty-free shopping arcades in Haikou and Sanya that sprawl over 100,000 square meters – part of Beijing’s pilot plan to lower tariffs on imported consumer goods and adjust renminbi exchange rates to dam the outflow of China’s spending power – have seen particularly brisk business since July.
Teeming duty-free stores in Hainan contrast with Hong Kong’s deserted Canton Road, as well as other empty shopping districts across Singapore, Seoul and New York, now that the bargain-hunting hordes from China are gone.
Hainan’s Provincial Department of Commerce said total sales of the four duty-free malls during the first ten days of July had doubled month-on-month to hit 5 billion yuan (US$723 million). More than 740,000 consumers flocked to the four malls on the island with international boutique brands offering prices even lower than overseas.
Cartier and Bulgari are among the brands offering big knockdowns off the prices of their best-selling jewelry to drive sales in Hainan and across China, when many of their stores in Europe remain shut or are devoid of customers.
In Shanghai, the opening of a new upmarket shopping mall owned by state-owned realty conglomerate China Resources brought out a huge crowd on Sunday. Police scrambled to implement crowd control measures to prevent a possible stampede, according to Shanghai’s Jiefang Daily.
Long queues are also seen outside the flagship stores of Louis Vuitton and Gucci in the neighboring port city of Ningbo. The city’s government-owned developer that operates a number of high-end shopping centers said June and July takings had surged by almost a third compared with the tepid performance in the first quarter.
Paul Hugentobler, a senior executive overseeing business operations of InterContinental hotels in Shanghai and the rest of eastern China, told Asia Times that the group’s hotels across Shanghai, Ningbo, Suzhou and Nanjing all had at least ten nights of “full houses” in each city since August, and the uptick would be sustained with the Chinese Valentine’s Day this week, the Mid-Autumn Day break in September and the National Day golden week in October.
The backdrop of the consumption boom is Beijing’s resolute measures to fend off and contain sporadic flare-ups of Covid-19 anywhere in the country, after having largely subdued the virus since March. Most recently, Beijing municipal government’s decision to drop a mandatory mask order for outdoor activities and gatherings has further boosted people’s confidence.
People are also expecting a cheap, effective vaccine that will be widely available by the end of the year. A deputy director of the National Health Commission revealed on state broadcaster China Central Television on Sunday that China started inoculating some nurses, immigration officers and crew members at the end of July, even though the vaccine was still in its third-stage human trial.
Zheng Zhongwei, in charge of vaccine and drug development and approval at the National Health Commission, told CCTV that to squash a fresh wave of infections this autumn and winter, more medical and essential workers would get their jabs in late September to form the first line of defense even if the vaccine is unlikely to be available next month.
Yet not all observers are optimistic about the sustainability of the current conditions.
A professor at the Peking University commented on Weibo that he feared the boom could be short-lived. The scholar is an assistant to Justin Lin, a former chief economist of the World Bank who attended a seminar on economic recovery hosted by Chinese President Xi Jinping Tuesday. He said Lin’s echoing of Xi’s mantra about self-sufficiency and potential of China’s domestic market was more about toeing Beijing’s line than a rational take on the actual situation.
The current consumption boom is more about releasing pent-up demand, he said.
“The consumption we are seeing now is indeed more about the transactions, trips and deals delayed since February, but no one knows just now much is the new demand being created.
“What’s really needed to spur consumption, like continued tax reforms, better consumer rights protection and fairer market access for private firms, SMEs and foreign brands, are still lacking. The optimism will fizzle out if all these elements are missing,” wrote the anonymous scholar.