China holiday spending sends a strong signal on consumer stimulus plans

BEIJING — China’s consumer market is rebounding — enough that policymakers won’t need to roll out the large-scale stimulus investors have long hoped for.

The nine-day Lunar New Year, which ends Monday, saw a steady increase in spending across the country, from hotel bookings to duty-free shopping. Rail travel takes a hit A record of more than 18.7 million passengers in one day.

While the better-than-expected data suggest Beijing’s latest support measures are effective, it underscores a broader consumer trend: Spending on experiences such as travel and entertainment is still growing faster than traditional goods, CCB International Securities said in a report on Tuesday.

China’s retail sales have been stagnant since the outbreak. Unlike the United States, which distributes cash to consumers, Beijing has instead offered exchange programs and coupons. Chinese officials have increasingly emphasized the need for consumers to increase their incomes but have not yet released details.

This is unlikely to change anytime soon.

“Policymakers will likely benefit from positive developments [holiday] “Seize the momentum to stabilize expectations and sustain the recovery and introduce targeted, gradual easing around the March Two Session,” CCB analysts said, referring to the annual parliamentary sessions that start next week.

Chinese Premier Li Qiang will announce the year’s economic goals and policy priorities on March 5.

Despite the recovery in travel, consumers remained price sensitive. Daily tourism trips across the country increased by an average of 5.7% compared to a year ago, according to public holiday figures released late Tuesday. Although spending increased by 5.5%, it slowed from 7% in 2025.

“Such trends reflect positive sentiment from a longer holiday, but consumers have generally remained cautious about budgeting,” Morgan Stanley Equity Analyst Lillian Lou said in a report Wednesday.

In a sign of persistent deflationary pressure, vacationing recorded a 0.2% decline in average spending per tourist trip compared with a year ago, according to CNBC’s analysis of official data.

China extended the public holiday period by one day compared to last year in order to increase consumer spending. Many people also took personal leave during the holiday, indicating that official figures may not reflect the full picture of spending.

“The extended holiday has encouraged families to travel together,” Jihong He, chief strategy officer of H World Group, one of China’s largest hotel operators, said in a statement. he said.

“This shift is driving demand for larger rooms and family-friendly configurations designed for shared experiences,” he said.

China expanded in December Zero tariff policy for the island To encourage duty-free purchases of luxury goods on the mainland. Official figures show Hainan’s duty-free sales during holiday period increased by 30.8% It rose to 2.72 billion yuan ($400 million) from a year ago.

Alibaba-owned travel booking platform Fliggy said bookings for hotel and theme park packages during the holiday season more than doubled from last year. More remote and beautiful destinations such as Altay in Xinjiang and Pu’er in Yunnan also saw bookings more than double, the company said.

China has sought to encourage its growing service sector. This month the Office for National Statistics revealed: Giving more weight to services in the consumer price index Compared to the previous base period in 2020.

Even consumer goods in China are increasingly shifting towards dining and social activities, Bruce Pang, an assistant professor at CUHK Business School, said in his speech in Chinese translated by CNBC.

He said the key to a recovery in consumption was confidence in income and employment prospects rather than shopping promotions. Pang added that policymakers should pay more attention to these long-term issues.

In the fall, China’s top leaders pledged to increase consumption over the next five years and then said the country would do so. Prioritize domestic demand.

Local governments in China issued more than 2.05 billion yuan of consumption coupons and subsidies ahead of the holiday, which “effectively created a floor under demand,” CCB analysts said.

But Liqian Ren, Modern Alpha director at US-based fund manager WisdomTree, said prioritizing consumption does not necessarily mean blanket stimulus.

Instead, Beijing appears focused on preventing consumption growth from falling below a certain level, Ren said, adding that industry growth will be roughly 2% to 3%.