Chinese consumers splurged on restaurants, online sales and movies over the Lunar New Year holiday as travel restrictions made it difficult for many of them to make their annual trips home.
Sales at “key” retailers and restaurants during the week-long holiday amounted to 821 billion yuan ($127 billion), an increase of 4.9% from 2019 and up 28.7% from last year, when the economy was in lockdown, according to figures from the Ministry of Commerce.
Robust consumption over the holidays helps put the country’s post-coronavirus economic recovery on a more sustainable footing. But the increase in spending was far below yearly growth rates of around 10% seen before the pandemic.
The “key” retailers tracked by the Ministry of Commerce are larger companies based in major cities, which likely benefited from virus restrictions that prevented millions of people traveling from cities to the countryside. The holiday is usually a peak period for consumption in the country’s rural areas.
The ministry didn’t release data for total retail sales during the holiday, which stood at 1 trillion yuan in 2019. That year, the annual increase was 8.5%, the slowest pace since records began in 2005.
Consumption over the Lunar New Year was “resilient,” analysts at Morgan Stanley wrote in a note, with the data indicating private consumption and capital expenditure are “taking the baton from infrastructure and property construction” in the economy’s recovery.
The number of people traveling over the past 20 days plunged 73% from a year ago, according to data from the Ministry of Transport. Visitor flow at shopping malls in large cities decreased 14% from 2019 levels, the Ministry of Commerce said, suggesting consumers remain cautious about visiting shops.
What Bloomberg Economics Says…
With people heeding the government’s request to forgo trips back to their home towns this year to keep the virus in check, it’s natural to worry about an impact on growth — restrictions last year, after all, added to the economic chill. Even so, we caution against excessive concern. Our analysis suggests the impact on GDP may be negligible in 1Q and indiscernible for the full year.
— David Qu, China economist
For the full report, click here.
Cinema box office sales were particularly strong over the period, climbing 33% from 2019 to 7.8 billion yuan, according to Maoyan Entertainment, which tracks the sector. That helped spur stock gains for companies like Imax China Holdings Inc. and Alibaba Pictures Group Ltd. this week.
E-commerce benefited from travel restrictions, as families exchanged gifts by post. Cainiao, the logistics arm of e-commerce giant Alibaba Group Holding Ltd., said package volumes it handled during the Spring Festival holidays were five times higher than the same period in 2019.
Sales of luxury goods in China have been stronger than mass-market products since the pandemic, reflecting restrictions on overseas travel and a stronger recovery in wages for high-earners. That trend appeared to persist over the holiday, with jewelery sales at retailers tracked by the Ministry of Commerce rising 161% on last year.
— With assistance by James Mayger