Why China’s Golden Week travel boom isn’t boosting spending

Golden Week sees restrained spending

Golden Week, China's week-long national holidays, was the busiest on record, as more than a billion journeys were made nationwide and more than 100 million passengers rode the railways. But behind the surge of the tourism season is the dark fact that tourists are spending little or nothing. Beijing policymakers, who contend with deflation and the stalled property market, have the tough challenge of lifting consumer morale when consumers remain anxious about the future, the Financial Times noted.

Indicators of restraint in tourist sites

In the globe's largest gambling hub, Macau, tourists packed casinos but very few were spending full price. There were tourists who spent a night in nearby Zhuhai in exchange for lower hotels, and tourists who slept inside 24-hour casinos as a way not to pay for hotels. At Shanghai Disneyland, hawkers of tickets said business was slow even with crowds, one saying, "Nowadays, nobody has money." Even outlet malls like Bicester Village had mixed reports, pointing out a gap between small spending on clothing and food and caution on large-ticket items.

Economic issues deflate festive cheer

Commentators cite underlying structural weakness. China's property downturn, unemployment among the young, and persistent industrial price war have left households on tenterhooks. Retail sales in the initial four days of the break increased just 3.3 percent year-on-year, fractionally short of the August increase. Economists at Goldman Sachs and Nomura commented that although activity had recovered, spending power remained "relatively soft" with consumption below the level seen in the break in May.

The tale of two economies

There are still some bright spots. Luxury residential property sales in the major cities indicate still-strong demand at the high end, as apartments at up to Rmb85mn have been flying off the shelves. High-end commercial districts like the Bund remain popular among purchasers, implying that the trade-in and voucher schemes by Beijing could be sustaining consumption on the high end. But consumption, for the majority, is still constrained to necessities on a quotidian basis, as "zero-cost" activities like park visits or cultural sites gain attraction.

The policy dilemma for Beijing

Golden Week's dual portrait reinforces the larger challenge confronting China's leaders. Investment in AI and high-end manufacturing is boosting morale in some sectors, but consumer spending is still lagging. Economists note that spending attitudes remain heavily dependent on property prices, employment, and future security. Inasmuch as these remain unstable, even packed trains and full tourism destinations will not necessarily be converted into robust consumption Beijing requires to fuel growth.

China’s holiday week shows a country eager to move again after years of Covid restrictions, but also one where optimism is tempered by financial realities. Tourists may travel, shop lightly, or pose for photos at historic sites, but many remain hesitant to open their wallets. For Beijing, the contrast between booming travel and muted spending highlights the uphill battle to restore consumer confidence in the world’s second-largest economy.