For Chen Xinlong and his wife, a trip to the world’s biggest gambling hub of Macau is a highlight of China’s Golden Week holiday this year — but the idea of spending money with abandon only goes so far.
Chen, a 39-year-old vegetable farmer from Fujian province, said the couple had decided to stay overnight in Zhuhai, the mainland city bordering Macau, to take advantage of its cheaper hotels. “It’s relatively expensive here,” he said of the former Portuguese colony.
Through China’s eight-day public holiday this week, there has been no shortage of public data trumpeting a travel frenzy, including more than 100mn train journeys by last weekend and 1bn trips from one region to another, according to state media and ministry announcements.
But as the holiday draws to a close, one question will be preying on the minds of policymakers in Beijing: how much are travellers spending?
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The government has tried to boost domestic spending against a backdrop of deflation, trade tensions with the US and a vicious industrial price war.
But in tourism hotspots across the country this week, there were early signs of the consumer caution that has gripped the world’s second-largest economy for years, and risks becoming increasingly entrenched as an extended property sector slowdown grinds on.
Traveller sentiment is still “very, very positive”, said Imke Wouters, a partner at Oliver Wyman focusing on retail and consumer goods, but consumers were “holding back their spending because of less positivity on the long-term outlook”.
“I think the difference [between] last year and this year is people are starting to become pessimistic,” she added. “In two years, it hasn’t improved.”
Official data on spending will be released after the holiday, which this year includes both celebrations of National Day, which marks the founding of the People’s Republic of China, and the annual mid-autumn festival.
Retail sales rose 3.3 per cent in the first four days of the holiday year-on-year, according to state media, citing the commerce ministry, slightly below a growth rate of 3.4 per cent in August.
“For consumption overall, the momentum or underlying impulse is not that strong,” said Hui Shan, chief China economist at Goldman Sachs. “You see a lot of traffic, but you don’t see a ton of spending.”
Outside Shanghai Disneyland, one of the country’s biggest attractions which drew in large crowds, a ticket tout offering entry for slightly less than the official price of Rmb799 ($112), still struck a downbeat tone one afternoon.
“Nowadays, nobody has money,” he said.
At the nearby Shanghai location of Bicester Village, the UK outlet store known for its popularity with Chinese tourists, shoppers laden with bags offered a glimpse into the kind of spending potential that the government hopes to encourage through trade-in and voucher programmes.
“For big things like a house, you might hesitate,” said Jia, who declined to give his first name and was visiting a crowded Nike store with his three-year-old son. “But for clothes, food, there isn’t such a large effect,” he added, referring to concerns about the economy.
Ting Lu, chief China economist at Nomura, said there were signs of “relatively soft mobility and consumption activities” halfway through the holiday, with growth underperforming the Labour Day golden week in May, and box office revenues below last year’s levels.
The Japanese bank said it expected “consumption to remain tepid for the remainder of the year”.
Li Ao, another of the nearly 800,000 visitors to Macau this week, slept in the city’s 24-hour casinos in order to save money.
A former fruit wholesaler in his 30s from Anhui province, he had more recently been travelling in search of part-time gig jobs, including as a delivery driver.
“This last year, I’ve mostly been doing Meituan because I can’t find any other work,” he said, referring to China’s biggest food delivery and ecommerce platform. “You can only spend if you have earned money.”
Kenneth Chow, an analyst at Oliver Wyman, noted a rise in the popularity of “zero cost” locations such as country parks or cultural sites, where tourists can pose for photographs — and limit spending.
That was playing out on Sunday at Shanghai’s historic Wukang Mansion in the city’s former French concession, where dozens of photographers armed with tablets hovered at the ready with on-the-spot professional editing.
“The last two years have been pretty hot,” said one such vendor from Jiangxi province, who said he has been working across China for two years after graduating from university.
Youth unemployment — which hit 19 per cent in August, a two-year high — is just one of a host of challenges facing Chinese policymakers, who are also grappling with deflation, a trade war with the US, an ageing population and a real estate crunch after decades of intensive construction.
There are some signs of spending power in the luxury housing market. Near Shanghai’s historic Bund district, famed for its European facades, one high-end development was being marketed to prospective buyers by appointment only. Its latest batch of apartments, costing up to Rmb85mn, sold out on the first day last month.
“Our location is pretty good,” said a salesperson.
But more widely, the real estate sector has struggled to gain momentum. New home prices have fallen consistently this year despite government support efforts.
For Wouters, stronger spending “ultimately depends on what’s happening with the overall economy . . . and what’s happening with property prices”.
“There needs to be a much clearer reason for Chinese shoppers to spend,” she said.
In Macau, Chen, the vegetable farmer, said he had lost a bit of money at the baccarat table, but “not too much”.
“You can’t play too big, otherwise you won’t be able to afford a living,” he said.
Additional reporting by Gloria Li in Hong Kong and Wenjie Ding in Beijing. Data visualisation by Haohsiang Ko in Hong Kong
