The May Day holiday in China has provided a glimpse into the state of consumer sentiment, revealing both promising travel trends and modest consumer spending. Although the five-day holiday saw a notable increase in travel activity, per capita spending remained subdued, trailing pre-pandemic levels despite a boost in retail transactions.
Travel Activity Sees Strong Rebound
During the May Day holiday, China witnessed a significant surge in travel, with approximately 10.9 million people traveling in and out of the country. This marked a 28.7% increase compared to 2024, signaling a revival in travel following years of pandemic restrictions. Notably, 1.1 million international visitors arrived in China, reflecting a 43.1% rise in foreign tourism, according to Xinhua news agency. These figures suggest that travel has bounced back strongly, signaling renewed consumer optimism in some areas.
Spending Growth Remains Modest
Despite the uptick in travel, spending growth during the holiday remained modest. The average expenditure per person reached 574.1 yuan (roughly $79), a slight increase of 1.5% from 2024. However, this amount still falls short of 2019’s levels, when per capita spending reached 603.4 yuan. This persistent gap highlights ongoing concerns about consumer confidence in China, amid economic uncertainty and external challenges such as global trade tensions and inflationary pressures.
Domestic Tourism Grows
Domestic travel showed encouraging growth, with 314 million trips taken across China during the May holiday, a 6.5% increase from the previous year. Digital payment platform Weixin Pay also reported a more than 10% rise in transactions, particularly in the restaurant industry, suggesting strong consumer engagement in certain sectors. This growth in domestic tourism underscores a shift in consumer priorities, as many turn to local destinations for holiday breaks.
Challenges for the Cinema Sector
While some industries saw growth, the cinema sector experienced a downturn. Total box office receipts plummeted to 747 million yuan, roughly half of what was generated in 2024. This decline raises questions about the evolving preferences of Chinese consumers, particularly concerning entertainment options during the holiday period.
Services Sector Faces Slower Growth
Recent data indicates a slowdown in the services sector, with the Caixin/S&P Global services purchasing managers’ index (PMI) dropping to 50.7 in April, down from 51.9 in March. This marks the lowest growth rate since September and suggests heightened uncertainty in the services sector, particularly in light of U.S.-China trade tensions. While government stimulus measures had initially sparked optimism, challenges in the broader economy, including deflationary risks, are beginning to dampen recovery prospects.
The Road Ahead: Consumer Confidence and Retail Strategies
As China navigates its post-holiday economic landscape, consumer confidence remains a key issue. With nearly 48% of the workforce employed in the services sector, the impact of trade tensions and economic uncertainties could have a far-reaching effect. To stimulate growth, experts suggest that short-term solutions, such as consumption vouchers, could encourage spending, while long-term strategies should focus on enhancing service quality and diversifying retail offerings.
Economic analysts emphasize that restoring consumer confidence is critical to unlocking the savings needed to support sustained retail growth. The mixed results from the May Day holiday serve as a reminder that while some sectors, such as travel and dining, show promise, broader consumer spending still faces significant hurdles.
Conclusion
The mixed signals from the May Day holiday underscore the complexity of China’s recovery. While sectors like travel and dining have demonstrated growth, the overall retail environment remains cautious, reflecting broader economic challenges. As the country moves forward, the retail sector’s ability to adapt to changing consumer behavior will be a crucial factor in determining future growth trends.
