May Day holiday spending craze boosts China’s economy

Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

Superhero blockbuster Avengers: Endgame turned out to be a big winner at the box office in China, raking in almost 600 million US dollars by Saturday, accounting for 40 percent of the movie’s total international box office. The movie’s success was clearly helped by a consumer spending frenzy during China’s four-day long May Day holiday.

Chinese travelers wait for their trains on the eve of the four-day May Day holiday in Hangzhou city, east China's Zhejiang province, April 30, 2019. [Photo: IC]

Apart from movie going, Chinese consumers also spent a large amount on travel during the holiday. Latest figures from China’s Ministry of Culture and Tourism show the country notched up a total of 195 million domestic tourist trips during the break, up 13.7 percent on last year. Tourism revenue surpassed 117 billion yuan (more than 17 billion U.S. dollars), up 16 percent. The figures show that family trips have become a highlight of the tourism sector, boosting cultural, recreation and catering consumption.

The holiday spending boom has once again reflected Chinese consumers’ confidence in the country’s economy, which has been bolstered by an increasing number of factors since the beginning of the year, such as increased foreign trade, foreign direct investment and employment.

In the first quarter, China’s economy registered a better-than-expected growth rate of 6.4 percent, which, according to Martin Raiser, World Bank country director for China, is a sign that economic activity had stabilized. Domestic consumption continued to be the driving force, contributing 65.1 percent to total GDP growth.

Tourists enjoy riding camels in Dunhuang, Gansu Province on May 2, the second day of the 4-day May Day holiday. [Photo: Xinhua]

The figures owe much to the government’s policy of fueling income growth. Measures include tax and fee reductions to the tune of 2 trillion yuan (nearly 300 billion US dollars) benefiting around 80 million taxpayers, as well as preferential policies favoring the service and tourism industries. According to an economic survey released in March by China Central Television, around two out of five Chinese nationals said they would spend more on tourism in 2019. This is the fifth year in a row that tourism has topped the consumer preference list, which also indicated stronger preference for travel from consumers in small-and-medium-sized cities.

As the government has pledged to continuously take more proactive measures to increase household income, cultivate new growth points for high-end consumption, explore domestic market potential and expand import capacity, it’s to be expected that the country’s ongoing consumption upgrade will be at the vanguard of several factors boosting China’s economic growth, with the potential to help rally much needed market confidence across the world.