During the Spring Festival (Chinese New Year) holiday, China’s largest holiday, the number of domestic travelers and the amount of money spent both exceeded the figures in 2019 before the novel coronavirus infection (Corona 19). In particular, revenue from movie ticket sales during the Lunar New Year holiday reached an all-time high. State-run media is extensively reporting related news, saying that this is good news for an economy suffering from a weak real estate market, falling stock market, and deflation (falling prices in an economic recession).
However, there is considerable counterargument that the Chinese economy still has a long way to go before it enters a phase of full-fledged recovery, with direct investment by foreign companies in China hitting its lowest level in 30 years last year. The prevailing view is that the economic boom during the Lunar New Year holiday is also a temporary phenomenon limited to visits to hometowns and tourism.
China’s Ministry of Culture, Sports and Tourism announced on the 18th that the number of domestic travelers during the Lunar New Year holiday period from the 10th to the 17th of this month was 474 million, a 34.3% increase over the same period last year. Compared to 2019, just before the outbreak of COVID-19, it increased by 19%.
During this period, the money spent by travelers also increased by 47.3% to 632.687 billion yuan (about 117 trillion won). It increased by 7.7% from 2019.
The theater district also enjoyed the effects of the Lunar New Year festival. ‘You Only Live Once’, directed by famous actress Jia Ling (42) and starring, earned 2.715 billion yuan (about 500 billion won) in ticket revenue. It is about an overweight woman succeeding in losing a large amount of weight through boxing, and in fact, Jia Ling also lost about 50 kg, which attracted a lot of attention.
Including this, 163 million people visited theaters during the Lunar New Year holiday, and ticket revenue amounted to 8.016 billion yuan (about 1.48 trillion won). These are all record-breaking Lunar New Year box office records.
The authorities were pleased with the long-awaited signs of domestic demand recovery. The Global Times, a state-run English-language newspaper, commented, “Recovery in consumption means a rebound in overall economic vitality.” Beijing Youth Daily also added, “Hot Spring Festival consumption shows the dynamism of the Chinese economy.” Reflecting these expectations, the Shanghai Composite Index of the Chinese stock market on the 19th also closed up 1.56% compared to the previous trading day.
Premier Li Qiang presided over a meeting of the State Council (Executive Department) on the 18th, the first day of returning from the holiday, and called for a ‘quick solution’ to the economic slowdown, saying, “All departments must take strong measures to promote high-quality (economic) development.” I ordered. It is known that major local governments with developed economies, such as Guangdong Province, are also busy preparing measures.
However, it is unclear whether China’s domestic demand will revive in earnest due to the Lunar New Year holiday. In the past, during the Lunar New Year, not only did the number of travelers increase, but citizens also bought large quantities of expensive items such as cars and high-end home appliances, but many people point out that this will not be the case at this year’s Lunar New Year.
In fact, according to Reuters’ own count on the 19th, the average spending per person during the Spring Festival was 1,335 yuan (about 247,000 won), which actually decreased from 1,745 yuan (about 323,000 won) in 2019. It is true that the number of travelers has increased, but individual spending has actually decreased.
Major economic indicators also add strength to this analysis. The consumer price index in January fell 0.8% compared to the same month last year. It has fallen for four consecutive months since October of last year, and is the largest decline in about 15 years since 2009. This shows that we are not free from concerns about deflation, which is considered a representative phenomenon of domestic demand stagnation.
There are also growing voices of concern about various policies hostile to foreign investors, such as the expansion of the ‘Espionage Act’. Last year, foreign companies’ direct investment (FDI) in China was estimated at $33 billion (about 44 trillion won). It decreased by about 80% from $180.2 billion last year, and plummeted to less than one-tenth compared to $344.1 billion in 2021, just two years ago.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.