China’s holiday tourism revenue is 39.2% of pre-pandemic level

BEIJING – As mainland China grapples with its worst outbreak of Covid-19 in two years, the gauge of consumer spending has fallen to levels not seen since the initial shock of the pandemic.

Travel restrictions and closures of regions or cities have discouraged people from traveling during a public holiday from Sunday to Tuesday.

Tourism spending by those who ventured outside has recovered just over a third, or 39.2%, from the level seen during the 2019 holiday, according to the Ministry of Culture and Tourism.

This is a much slower pace than during the Lunar New Year holidays earlier in the year, when Tourism spending was 56.3% of what it was in 2019.

For more than three weeks, the number of COVID-19 cases in mainland China has crossed 1,000 per day and touched regions across the country. The number of asymptomatic cases is much higher.

Shanghai, the country’s largest city, is one of the hardest hit cities in China’s wave of a highly mobile omicron variant. The city was supposed to end a two-part lockdown on Tuesday, but earlier this week it gave no indication when the restrictions would be lifted.

In all, about 193 million people in the country are living in total or partial lockdown, in areas that account for about 22% of China’s gross domestic product, Nomura’s chief China economist Ting Lu said in a Tuesday report.

“The markets can underestimate the extent of the economic damage,” he said. “China [zero-Covid strategy] It may save many lives, especially among the elderly, but it also leads to significant economic cost and collateral damage to people who are unable to obtain normal medical treatment for diseases other than COVID.”

“Unlike spring 2020, when there was a general belief that Covid-19 would end in the summer, we currently see no end in sight; this has increased uncertainty, which is very negative for investment,” Lu said.

The number of cases and deaths from Covid in mainland China is still lower than that of other major countries. The country’s large factories have been able to maintain production by keeping employees on site, with economists expecting service industries to remain the hardest hit.

Shanghai Disney The resort, which closed more than two weeks ago, said on Wednesday that its theme parks and hotels remain closed until further notice.

Tourism revenue in the latest long weekend fell 30.9% from the same period last year to 18.78 billion yuan ($2.93 billion), the ministry said. Tourist trips fell 26.2% from the same period last year to 75.4 million, or 68% from the pre-pandemic level, according to the data.

People who were able to travel during the holiday mostly booked trips to nearby scenic spots or in the countryside, according to booking site Trip.com.

In a country where online shopping is rampant, Covid has also affected parcel delivery.

The number of parcels received and delivered during the holiday is down nearly 13% from last year, according to the State Post Office. It was not immediately clear whether logistical obstacles or consumer demand was the main reason for the decline.

The Caixin Services Purchasing Managers’ Index (PMI), a measure of market conditions, showed on Wednesday that Business activity in the sector contracted in March by the most in two years.

“Companies have repeatedly reported that stricter virus containment measures disrupted operations and affected customer demand in March,” Caixin said in a statement. For the third month in a row, data showed that service companies were reluctant to hire more employees.

Service companies generally remain optimistic about growth over the next 12 months. But the statement said that the degree of optimism had fallen to its lowest level since the second half of 2020, “amid concerns about the duration of business operations that will be affected by the epidemic and the war in Ukraine.”