Spending by Chinese travelers rose 8% during the May Day holiday from a year earlier to reach 180.27 billion yen (US$24.92 billion), but still below pre-pandemic levels, while the country's services activity expanded at the slowest pace in seven months in April.
Analysts are closely watching the May Day holiday, one of the country's longest, as a barometer of Chinese consumer confidence.
Consumption in the world's second-largest economy has suffered amid shaky growth and a prolonged housing slump, and the fallout from the U.S.-China trade war is expected to deepen the pain.
China's Ministry of Tourism recorded 314 million domestic trips during the holiday, up 6.5%, while the number of transactions using Weixin Pay, a popular payment app, increased by more than 10% year-on-year, with a notable surge in dining spending.
During the five-day holiday, 10.9 million people entered and left the country, an increase of 28.7% compared with 2024. Of these, 1.1 million were foreigners, a sharp increase of 43.1%, the official Xinhua News Agency reported.
But total per capita spending during the five-day May holiday period rose just 1.5%, typically a busy period for family travel. It came to 574.1 yen, according to Reuters calculations based on official data.
It remains below 2019 levels, when per capita spending was 603.4 yen.
Cinemas suffered a significant drop in ticket sales, with box office receipts during the five-day holiday at 747 million yuan, only about half that of the same period in 2024.
Slowdown in growth
Meanwhile, China's services sector saw new order growth slow in April compared to March. The uncertainty caused by the US tariffs influenced the slowdown. A private sector survey, released this Tuesday, brought this information.
Despite stronger-than-expected economic growth in the first quarter, supported by government stimulus, China's economy continues to face persistent deflationary risks.
The Caixin/S&P Global Services Purchasing Managers' Index (PMI) fell to 50.7 in April from 51.9 in March, the lowest reading since September. The 50 mark separates expansion from contraction.
That result was broadly in line with China's official survey, which showed service activity fell to 50.1 in April from 50.3 the previous month. The Caixin PMI is considered a better indicator of trends among smaller, more export-oriented firms.
Caixin’s services survey showed new business growth slowed to the weakest level since December 2022. Despite this, export orders rose slightly. This increase was partly due to a recovery in tourism.
The drop in the Caixin PMI provides further evidence of the effects of the trade war. It is weighing on economic activity in China, even beyond the manufacturing sector, said Zichun Huang, China economist at Capital Economics.
“While some caution is clearly warranted, we suspect that companies are overestimating the damage that US tariffs will cause,” she said.
Source: Joe Cash, Casey Hall, Sophie Yu and Liangping Gao | Notícias Agrícolas
