Bloomberg said signs of an era of austerity are looming on the Chinese horizon as spending patterns indicate cautious economic sentiment.


A Bloomberg report said that although Chinese tourists have returned to pre-pandemic levels, signs of an era of austerity are looming as tourists' spending patterns indicate cautious sentiment.

The agency said that despite the significant increase in the travel market during the week-long Lunar New Year holiday, tourists did not spend as lavishly as expected.

Official data from China reported a significant increase of 19% in the number of tourist trips to 474 million trips during the Chinese New Year holiday, compared to the pre-pandemic period in 2019.

According to the report, these trips contributed to recording tourism spending worth 633 billion yuan (88 billion US dollars), an increase of 8% compared to 2019 levels.

It is noteworthy that spending on domestic tourism increased by 47.3% during this holiday compared to the same period last year 2023, according to what was reported by Agence France-Presse.

The Chinese made extensive use of transportation to meet relatives and friends, who sometimes reside a long distance away, to celebrate the start of the Year of the Dragon on February 10.

Last year, many Chinese chose to avoid these meetings because the virus was still spreading.

However - the Bloomberg report says - saving behavior appeared to have become popular, as per capita tourism revenues during the festive period decreased by 9.5% compared to 2019.


The report conveys the warning of economists at Nomura and Goldman Sachs that despite the headline numbers, spending on commodities and expensive goods remains weak, and may be affected by ongoing economic challenges.

Per capita tourism revenues decreased by 9.5% compared to 2019, despite the significant increase in the number of tourist trips. (Reuters)

“Although we see some strength in the data, the ongoing economic decline is likely to worsen in the spring,” Bloomberg quoted Ting Lu, chief economist at Nomura Bank, as saying in a research note.

The Chinese economy is suffering from a decline in the real estate market, a faltering stock market, weakness in consumer spending, and a decline in growth.

Skeptics like Wheeler Chen, an analyst at Forsyth Barr Asia, believe the traffic figures may be misleading, stressing that austerity still prevails when looking at average spending.

The holiday extended over 8 days this year compared to 7 in 2019, which makes the comparison somewhat misleading, according to what a report by Agence France-Presse said.

In the global economic landscape, China faces challenges in attracting foreign direct investment.

Last year, the country saw the smallest increase since the early 1990s, underscoring the obstacles Beijing faces in securing external funds to support its economy.

Bloomberg's recent report indicates that while China faces economic challenges and strives to attract foreign investment, it remains to be seen how these dynamics will shape the country's financial landscape in the coming months.

In January, consumer prices in China witnessed their largest contraction in 14 years, contradicting inflation prevailing in most major economies.

Source: French + Bloomberg