[Correspondent Diary] Boosting Consumption Ahead of Labor Day in China

Q2 Qingming Festival and Labor Day Consumption Likely to Increase China's Domestic Demand Share
Amid US-China Tensions, Xinjiang and Tibet Reservations Surge... Car Rental Bookings Up to 500% Increase

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Ahead of the Labor Day holiday (May 1?5), the Chinese government is encouraging consumption.

On the 18th, the state-run Xinhua News Agency published an article titled "The hottest Labor Day holiday in history is approaching," boosting the consumption atmosphere. It also reported that airline tickets in major cities were sold out during the Labor Day holiday period.

[Image source=Yonhap News]

According to data from China's largest online travel agency, Ctrip, most economy class airline tickets on 51 major routes in China were sold out from April 30, the day before the holiday, to May 5.

The situation is similar for train tickets. As of the 16th, most train tickets for major cities on April 30, the day before Labor Day, had been issued. Based on ticket issuance, Xinhua News Agency reported that Guangzhou South Station, Chengdu East Station, and Shenzhen North Station will be the busiest train stations during this holiday period.

Hotel reservations have also surged, making it difficult to find luxury hotels in major cities. Hotel bookings increased by 42% compared to the 2019 Labor Day holiday period. Due to the surge in demand, hotel prices in China's Jinhuangdao rose by up to 222%.

Car rentals also surged by 126% compared to 2019. Possibly due to increased interest from Chinese people amid US-China tensions, car rental reservations in the northwest region of China showed an unusual phenomenon, increasing by up to 500%. Xinhua News Agency added that car rental bookings in Xinjiang Kashgar, Xining, Yinchuan, Urumqi, and Tibet Lhasa increased by 198?500% compared to 2019.

Xinhua News Agency estimated that the per capita expenditure of Chinese travelers visiting 10 major cities during the Labor Day holiday period will reach 2,890 yuan (approximately 494,710 KRW). This amount is more than 58% higher than last year's 1,688 yuan.

The surge in airline, train, hotel, and car rental bookings in major cities during the Labor Day holiday was covered by most Chinese media besides Xinhua News Agency. Since the Chinese leadership is focusing this year’s economic growth on the dual circulation policy (export and domestic demand activation), it is interpreted as an intention to make the most of the last holiday of the first half of the year. Having rebounded from minus (-) 6.8% in Q1 last year to 3.2% in Q2, the second quarter of this year cannot rely on the base effect like the 18.3% in Q1. Consumption holds the key to economic growth.

The atmosphere is not bad. At the beginning of this month, the number of people traveling during the Qingming Festival holiday was recorded at over 102 million. Before COVID-19, the number of travelers during the Qingming Festival in 2019 was 112 million. It has virtually recovered to pre-pandemic levels. The Global Times reported that right after the Qingming Festival holiday ended, "Consumption in China ignited during the Qingming Festival holiday," and suggested that the second quarter GDP is likely to grow by "more than 8%."