Insight: This year’s Chinese New Year holidays, ushering in the Year of the Dragon (or Loong as it is known locally), boasted a welcome rebound in domestic and outbound travel. More than 61 million rail trips were made in the first six days, the highest in the last five years. Visa-free travel policies also made Southeast Asian countries like Singapore and Thailand popular travel destinations, while platforms like Trip.com and Meituan saw growth in sales. All pointing to increased spending on hospitality, consumer goods, and food and beverage. Is this a sign that China’s sluggish economy is turning a corner in 2024?
Impact: Stifled consumer spending has been a major concern for the Chinese government, and the Chinese New Year Holidays are often seen as an important benchmark to gauge the public’s spending appetite. However, although travel saw an encouraging uptick, per-trip spending did not exceed pre-Covid levels and big-ticket spending on housing and automobiles remains low. Sales of new homes in 25 representative Chinese cities fell by 27% year-on-year as consumers remain cautious about big investments. The People's Bank of China this week announced an unprecedented 0.25% reduction in the benchmark five-year loan prime rate to support the ailing sector. However, the CSI 300 Index has only shown modest post-holiday gains, suggesting investor confidence has not yet returned. All eyes will be on March’s Two Sessions government meeting to see what policy levers the government may pull next.