Chinese holidaymakers cut back sharply on travel and spending during the National Day break this week as strict Covid rules discouraged movement, while signs of a consumer slowdown across Asia mount.
The number of trips booked by rail from Sept. 28 through Oct. 8. is expected to be 68.5 million, state broadcaster China Central Television reported Friday, citing estimates by China State Railway Group Co. That’s about 38% less than the 110 million trips by rail during the comparable period last year, according to Bloomberg calculations based on China State Railway’s data.
Cinema tickets also plunged, with sales reaching just 1.4 billion yuan ($197 million) as of 1 p.m. local time Friday, according to online ticketing service provider Maoyan Entertainment. That’s less than a third of the box office for the full seven-day break last year, and also much worse than the nearly 4 billion yuan earned in 2020.
The weak spending figures spell bad news for China’s consumer recovery at a time when economic growth risks are mounting. The slump in the property market shows no signs of easing, global demand for Chinese goods is slowing and the currency is plunging. Several economists say Beijing is unlikely to ease its Covid Zero policy until after March next year.
The deterioration in the world’s second-biggest economy coincides with a broader downturn across Asia in sectors from electric cars to memory chips and online shopping, and may indicate more weakness to come.
Samsung Electronics Co. reported its first profit drop since 2019 as memory chipmakers face sharp declines in orders, with macroeconomic shocks to soaring inflation and rate hikes hammering consumer sentiment. Expectations that household budgets are getting tighter also prompted a rating downgrade and stock slump for online payment company Kakaopay Corp.
Back in China, the formerly bright spot of EVs has taken a hit with shares of Chinese makers plunging in Hong Kong on Friday on predictions of worse-than-expected orders during the holiday period.
China’s markets are due to re-open on Monday with Covid-19 cases at the highest in about a month and authorities facing increasing pressure to curb its spread before the Party Congress. Despite pleas for residents to stay home during Golden Week, typically a peak period for travel, infections are flaring in holiday spots and there’s been a fresh round of lockdowns from Hainan in the south to Inner Mongolia in the north and Xinjiang in the west.
The rise in cases is stoking concerns about whether similarly tough measures may be deployed more widely in the lead up to the congress, at which President Xi Jinping is expected to secure a precedent-breaking third term in power. Xi has made Covid Zero a cornerstone of his leadership, and Beijing views the measures as key in averting the death tolls seen in other parts of the world despite its growing social and economic costs.
