China’s Overall Consumption Downgrades, Travelers Had No Money to Spend on Golden May Holiday

During the May Day holiday, 270 million people embarked on journeys, yet the average expenditure barely exceeded 500 yuan. What seemed like a nationwide travel extravaganza was, in truth, a thrifty spree for those less fortunate. Why do countless individuals opt for frugality over indulgence? The reasons are evident: a scarcity of security, stagnant income growth, and the necessity to curtail consumption. People who once frequented gyms are now dancing at the local plaza; former users of miracle water have turned to rice-washed water; and dining out has been replaced by pre-made meals.

In summary, over a billion people stayed in their cities during the May Day holiday, resulting in a consumption rate that reached only 80% of pre-pandemic levels. During the May Day holiday, a noticeable decline in tourists from mainland China to Macau and Hong Kong was observed compared to 2019. In Macau, a mere 130,000 visitors were recorded during the holiday, with actual numbers potentially only in the tens of thousands, constituting a mere 20% of the corresponding period in 2019. Hong Kong, on the other hand, welcomed 450,000 mainland tourists, a figure that represents only 60% of pre-pandemic levels. This reduction in visitors may be attributed to diminished consumption capacity.

Comparing China with developed Western economies and East Asian neighbors, such as Japan and South Korea, where consumption contributes to 70-80% and 65-75% of GDP respectively, China's consumption accounted for only 54.3% in 2022. Excluding government consumption at 17%, household consumption's share of GDP stands at a mere 37%. Although the Chinese government asserts that there is vast potential for domestic demand, available data suggests otherwise. To achieve consumption potential on par with Western countries, China's economic structure would need to resemble that of the West.