China witnessed a significant surge in domestic tourism during the May Day holiday, with the number of trips rising by over two-thirds compared to the previous year, according to government data released on Wednesday. This resurgence in tourism has bolstered the outlook for the world's second-largest economy, as a sustained recovery in the service sector could alleviate concerns of a potential slowdown in China's post-pandemic economic growth.
During the five-day holiday that started on Saturday, 274 million domestic trips were taken by eager Chinese travelers, marking a 70.8% increase from the previous year and a 19% increase from 2019, as reported by the Ministry of Culture and Tourism. The total tourist expenditure reached 148 billion yuan ($21 billion), a 128.9% increase from the previous year and on par with 2019 levels.
This year's May Day holiday, the first travel season without pandemic restrictions, is being closely monitored as an indicator of China's economic health. Official data from Sunday showed that China's non-manufacturing sector expanded in April, albeit at a slower pace than in March.
Goldman Sachs noted in a report that "the strong holiday tourism data, together with the still-solid April services PMI, bode well for consumption and services recovery in the coming months, despite the softening in manufacturing growth momentum." The report further added that this supports their above-consensus 2023 GDP growth forecast of 6.0%.
The next phase of consumption recovery will depend on increased income growth and improved consumer confidence, making the recovery model more sustainable, according to Goldman Sachs.
Vontobel, an asset manager, believes that China's recovery should accelerate, benefiting domestic consumer-focused companies across leisure, e-commerce, and travel sectors, as well as travel-oriented businesses throughout Asia.
By the end of the holiday period, total box office collections for May Day movies had surpassed 1.5 billion yuan, making it the third-highest grossing May Day box office in Chinese film history, as reported by state television on Thursday.
The official Xinhua News Agency referred to the travel boom during the May holiday as "a turning point of China's tourism sector." The China Tourism Academy estimates that about 4.55 billion domestic tourist trips will be made this year, representing a 73% increase from 2022, according to Xinhua.
