China’s service sector has made a promising start to its recovery from its Covid-induced doldrums as the country saw tourism and spending surpass pre-pandemic levels during the five-day Labor Day holiday that ended Wednesday.
Why it matters: About 274 million domestic trips were made during the holiday, the second longest holiday since Covid restrictions were lifted last December, China’s Ministry of Culture and Tourism announced on Wednesday. Figures recorded over the period signal the country is seeing a resurgence in offline services and long-haul travel.
Details: Chinese domestic travel revenue surged to RMB 148.1 billion ($20.3 billion) during the May holiday, but while this marked a 128.9% year-on-year increase, per capita spending has only recovered to 90% of 2019 levels, government data showed.
- China’s trains took around 120 million passengers around the country between April 27 and May 3, according to data released by China State Railway Group.
- First-tier cities including Beijing, Shanghai, and Hangzhou were the most popular destinations this holiday, while third- and fourth-tier cities also experienced an unusual influx of tourists.
- For example, Zibo – a city in eastern China’s Shandong province famous for its affordable local barbecue – saw its hotel reservations up more than 20 times compared to the 2019 level, data from travel service provider Qunar showed, as cited by media outlet NBD. Hotel reservations in third- and fourth-tier cities in general increased by more than 150% compared to the same period in 2019.
- Asian countries and regions were the main destinations for Chinese outbound tourists during the holiday. Reports from Tencent’s WeChat-affiliated payment platform Weixin Pay sent to TechNode showed Hong Kong, Macau, and Japan as having the largest increases in offline payments compared to 2019. Japan saw the highest increase in average daily transactions through Weixin Pay in-store, by 141%. In Hong Kong SAR and Macao SAR, the average daily spending amount with Weixin Pay in-store registered the biggest growth (of 137%), while the number of transactions increased by 118%.
- Alipay, China’s largest digital payment platform, also reported a surge in spending by Chinese consumers using the platform for travel-related purchases during the first three days of the holiday. Overall spending increased by 70% compared to the same period in 2019, Alipay said.
Context: The recent holiday was China’s first in three years in which large scale travel was unimpeded by the Covid pandemic or restrictions imposed to prevent the virus’ spread. The lengthy pandemic severely hampered the country’s spending and dampened travel enthusiasm nationwide.