China is shopping, just not quite enough. Official numbers after a week-long National Day break showed revenue from domestic tourism climbed 8.5 per cent compared to 2018, the slowest pace in at least 17 years. Retail and dining numbers also failed to dazzle.
Beijing wants consumers to help revive a flagging economy, but a weak yuan and the fading impact of tax cuts will keep purse strings tight. Golden Week, which began on October 1, has long offered a snapshot of Chinese consumption.
This year, the picture is less than shiny. Spending on retail and dining was up 8.5 per cent compared to a 9.5 per cent increase last year according to Citi, and well below double-digit increases a decade ago. Growth in domestic travel cooled too.
Some 7 million Chinese still ventured overseas, a measure of the country’s increasing wealth, but the number of outbound travellers in the first six days of October fell 15 per cent compared to a year ago.
In part that was due to China’s anniversary celebrations, and Hong Kong hardly helped: anti-government protests there have prompted numbers coming over the border to fall precipitously. But it measures wider household concerns. Instead, it was the small luxuries that did well, like trips to the movies.
Patriotic flicks including ‘My People, My Country’ — stories inspired by China’s history — drew record box office revenue and over 100 million viewers during the holiday, according to Xinhua.
Beijing, which usually leans on infrastructure to stimulate the economy, has increasingly turned to consumers too.
Stimulus measures, including a personal income tax unveiled late last year, did help lift disposable incomes by 8.8 per cent in the first half. That would have been 7.2 per cent without the boost, reckons analyst Ernan Cui of Gavekal Dragonomics.
Unfortunately, that’s not feeding into shopping baskets fast enough, given it impacted wealthier households more. Add to that a depreciating currency, US tariffs and worries over property prices, and a swift rebound looks unlikely. — Reuters
Oman Observer is now on the WhatsApp channel. Click here
