As millions of Chinese re-emerged from the sudden wave of Covid-19 infections experienced after China relaxed control measures in early December, the country’s consumption and travel saw promising rebounds during the week-long Lunar New Year holiday (Jan. 21 to Jan. 27). This recovery may set the stage for major Chinese tech companies to recover some of their losses in the coming months.
Why it matters: China’s major mobile payment platforms, WeChat Pay and Alipay, each saw about a 20% yearly increase in transactions. Meanwhile, food, travel, and entertainment businesses saw a similar yearly increase during the festive period, with spending on restaurants and movies returning to 2019 levels.
Details: The Lunar New Year holiday this year marked the first time in three years that people were able to travel freely across the country. Although it is traditional for people to reunite with their families during the period, since early 2020, the Chinese government had discouraged people from traveling home due to fears of large outbreaks of Covid-19.
- Offline transactions also rebounded after authorities relaxed stringent pandemic measures. Tencent’s WeChat reported a 23% increase in the volume of offline commercial payment transactions during the 2023 Chinese New Year holiday compared to last year.
- Ant Group’s Alipay recorded a nearly 20% increase in mobile payment volume in tier-3 and other lower-tier cities for the week-long break.
- Data from the China Cuisine Association showed a 24.7% year-on-year increase in revenue for surveyed catering businesses during the seven-day Lunar New Year holiday, a 1.9% rise compared to the same period in 2019. Customer flow also largely returned to 2019 levels.
- The Lunar New Year box office this year reached RMB 6.76 billion ($990 million), second only to the record RMB 7.84 billion taken in 2021, and a 15.7% increase from 2019.
- The country saw 308 million domestic trips during this year’s holiday, a 23.1% increase from the previous year, but the number of trips and domestic tourism revenue were still down by more than 25% on 2019 levels.
- Civil aviation transported 9 million passengers between January 21 and 27, a 79.8% year-on-year increase, according to the Civil Aviation Administration of China.
Context: An executive meeting of the State Council held on Jan. 28 emphasized consumption as the main driver of the economy. Multiple provinces and administrative regions, including Shanghai and Guangdong, have made reviving consumption and boosting growth a priority, with Guangdong projecting a 6% increase in total retail sales of consumer goods for 2023.
- China reported 3% GDP growth for 2022, one of the worst rates in decades, with final consumption expenditure contributing only 32.8% to economic growth, down significantly from 2021.
- In 2022, China saw a massive increase in bank savings, reaching a record of RMB 17.84 trillion, nearly doubling the RMB 9.7 trillion recorded in 2019, as strict Covid controls suppressed consumer spending.