Strong spending underlines the vitality of the Chinese economy

An aerial drone photo taken on May 2, 2024, shows tourists visiting a historical and cultural district along the Grand Canal in Wuxi, east China’s Jiangsu province. (Photo/Xinhua)

The May holidays in China witnessed a surge in tourism and robust consumer spending, underscoring the resilience and dynamism of the world’s second-largest economy.

This vitality is reflected in encouraging growth figures. Official data showed that around 295 million domestic tourist trips were made during the five-day holiday, up 7.6 percent year-on-year and a significant increase of 28.2 percent from the same period in 2019. Domestic tourist spending also rose by 13.5 percent compared to last year. to 2019 figures.

During the holidays, China processed nearly 8.47 million entries and exits, a notable increase of 35.1 percent over the same period last year. The country’s box office revenue exceeded 1.52 billion yuan ($214 million), making this year’s May holiday the third most profitable in history.

Holiday periods are valuable indicators of economic activity and consumption trends. Insights from the May holidays reaffirm that consumption remains a cornerstone of China’s economic growth trajectory, supported by structural changes and progress in high-quality development.

In the first quarter, China’s GDP grew 5.3 percent year-on-year. It is striking that domestic demand contributed 85.5 percent of economic growth, while consumer spending accounted for 73.7 percent.

There has also been a notable shift in household consumption patterns, from a primary focus on goods consumption to a more balanced emphasis on goods and services. Per capita expenditure on services accounted for 43.3 percent of total per capita consumption expenditure in the first quarter.

The increasing popularity of consumption in services, including tourism, entertainment, digital services, healthcare and environmentally friendly products, reflects China’s enormous consumption potential. Meanwhile, the adoption of innovative technologies has given rise to new business models such as livestreaming, direct retailing and intelligent logistics, fueling the growth of online retailing of physical goods.

A meeting of the Political Bureau of the Central Committee of the Communist Party of China on April 30 emphasized proactive measures to expand domestic demand and implement initiatives such as large-scale equipment upgrades and consumer goods trade. The meeting also called for creating more consumption scenarios to better meet the population’s needs for diversified and high-quality consumption.

In terms of commodity consumption, local governments have implemented trade-in programs, which has contributed to the steady growth of high-value consumption. In particular, retail sales of automobiles, home appliances and furniture, monitored by the Commerce Department, all saw steady growth during the holidays.

China has set a growth target of around 5 percent for this year, and the Chinese economy is off to a promising start, reinforcing the positive trajectory of its recovery. Expectations are high that the Chinese economy will continue to lead the major economies in terms of growth and remain an important driver of global economic growth.