Chinese state media says the shelter-in-place world is “watching with envy” as almost all Chinese go on an eight-day National Day holiday, which started on October 1.
“When Chinese people have long started going about their lives as normal and are now out and about to relax and relish the long national holiday, people who are housebound in numerous countries still in the grip of Covid can only shoot envious glances at us,” a Xinhua commentary said.
“The Chinese economy has also stirred back to life when people are filled with joie de vivre and are more willing to dine out, travel around and spend as they bid good riddance to lockdowns and inconveniences.”
The article summed up the widespread post-Covid feel-good factor. The vibe is palpable across the nation, merely nine months after the contagion first struck at the end of December.
The Golden Week break is drawing to a close but many tourist attractions and hangouts continue to overflow with people. The sight must be heartening to top policymakers as Beijing is anxious to spark more consumption-led economic growth under President Xi Jinping’s “internal circulation” plan.
Yet, contrary to the optimism purveyed by state media, the latest consumption statistics for the festive period present a mixed picture.
Each year’s National Day holiday is a barometer of how China’s economy and consumption are faring. Total retail and tourism takings across the nation during the first five days of the holiday were close to 400 billion yuan (US$59 billion), when almost 500 million people thronged scenic spots and shopping malls across the nation, according to preliminary data compiled by China’s Commerce Ministry.
Total spending soared more than seven-fold from 55 billion yuan in the first five days of the Labor Day break in May, when cities were still deserted as fears of the pandemic’s possible resurgence kept most people at home.
While highlighting that holiday spending between now and then has “doubled and redoubled,” papers including the People’s Daily have glossed over the fact that the latest National Day Golden Week spending is roughly a third lower than the corresponding level a year ago, when China’s 70th-anniversary extravaganzas helped unleash an outpouring of patriotism and hedonistic spending.
Retailers, caterers and hoteliers nationwide raked in 550 billion yuan in the first five days of October 2019 in a consumption bonanza. The latest data from the ongoing holiday suggest there is no “consumption boom”, contrary to the state’s propaganda.
Monthly changes in China’s total consumer spending in 2020 did not return to positive territory until as late as August, registering a negligible 0.5% increase, even though the coronavirus has been kept at bay since April.
The eight-month total was down 8.6% year-on-year to less than 24 trillion yuan, or a meager 18,400 yuan per person. China is yet to release consumption figures for September.
Teng Tai, chief of the Beijing-based semi-official think tank Wanb Institute, noted in a report on Beijing’s “internal circulation” drive that if China wanted 2020’s total consumer spending to be equal to 2019’s 41 trillion yuan, a pre-Covid high, then the nation’s spending must hit 17 trillion yuan from October to December. He called that goal a “very tall order.”
Fresh policy incentives to spawn domestic demand and spending are said to be in the works and may be announced soon after the holiday. Beijing has already ordered tax waivers and rebates for a wide swathe of small and medium enterprises as well as micro startups since the height of the plague. Yet so far measures to help individual wage earners have been lacking.
Analysts say Beijing must recalibrate its tax, consumer rights protection and social security policies to entice more consumer spending. Otherwise, Xi’s new strategy may not keep the economy ticking along.
Observers have also warned of a prolonged lag between the rollout of policies and the boost they may deliver. They say 2020’s full-year data should serve as a more reliable gauge of the health of consumption and the economy. China Business News reported that Beijing had scrapped economic and consumption growth targets in its appraisal of local cadres’ performance.
The Chinese economy booked a 3.2% increase in the second quarter over the first three months. The quarter-on-quarter recovery was more driven by a rebound in manufacturing and government spending than consumption.
Since April, Beijing has mandated factories, big and small, to call back furloughed workers to resume production. The imperative, however, risks a relapse of GDP growth through a supply glut amid weak demand.