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This week, Chinese residents are returning home after their “National Day Golden Week” holiday. The week-or-so-long period, along with China’s National Day on October 1, is a vital sign for the trust of Chinese customers, like millions of other local and foreign people.
And yet, this year’s Golden Week, the first since China eased its strict COVID-19 controls last year, is proving a mild disappointment. Travel fell short of official forecasts, and it appears Chinese consumers are in no position to return to full spending amid a struggling economy.
Data released through China’s Ministry of Culture and Tourism on Monday showed 826 million trips with a profit of about $103 billion during the eight-day holiday era that began on Sept. 29. The ministry said those figures constitute a 4. 1% increase in the number of trips. and a 1. 5% increase in tourism revenue through 2019.
The return of the Golden Week of income provides “positive signals in certain aspects such as tourism spending, income and retail sales,” suggesting a “steady recovery in domestic income for this year,” said Hunter Chan, Greater China economist at Standard Chartered.
Still, officials had hoped for a stronger recovery this year. Before the holidays began, the government was forecasting only 900 million trips that would generate profits of about $107 billion.
In 2019, the last Golden Week before the COVID pandemic disrupted travel, Chinese travelers made 782 million domestic tourist trips, according to China’s Ministry of Tourism.
International trade is also recovering, but remains below pre-pandemic levels. Departures accounted for 85% of 2019 levels, according to information from China’s National Immigration Administration. Travel to popular long-haul destinations such as Switzerland, the United Kingdom, and France saw the fastest expansion in comparison. until Labor Day in May, according to knowledge published through booking company Trip. com.
A backlog of visas and a lack of overseas flights are holding back the recovery of overseas travel, says Boon Sian Chai, vice president of overseas markets at Trip. com Group. Flights to and from China are still below pre-pandemic levels, while foreign countries have been slow to approve a flood of new visa programs for interested Chinese tourists.
As state media celebrates the “Golden Week” figures, Chan is only cautiously positive about China’s economy, pointing to customers’ poor knowledge in other areas, such as cash receipts.
“Overall confidence is still based on real estate and the labor market,” he says. “We remain cautious that the recovery will be based on restoring confidence in those two sectors. “
China’s asset sector, which accounts for about one-third of China’s GDP, is grappling with a primary crisis of confidence. A default in 2021 by China Evergrande Group, one of the country’s largest personal promoters, triggered an industry-wide contagion. Developer Country Garden has reignited concerns about the stability of the sector.
The country’s economy is also suffering from a youth unemployment crisis. More than 20% of young people aged 16 to 24 were unemployed in June. (In August, China’s statistics bureau announced it would suspend the measurement of youth unemployment. )
Taken together, those problems are contributing to a crisis of confidence that is stalling China’s post-Covid recovery. “The healing effect of more than three years of COVID-related disruptions and the slowdown in the property sector have had a terrible effect on Chinese families. balance sheets,” Alfredo Montufar-Helu, program director of the Conference Board’s China Center for Economics and Business, told Fortune.
China will release its new monthly customer value index on Friday. And next month, economists will see a strong signal for Chinese consumption: “Singles’ Day,” the world’s largest online grocery shopping festival, kicks off on Nov. 11.
This story appears in Fortune. com