China’s domestic tourism — a key indicator of retail spending — is on track to make a comeback after falling to an all-time low during the nation’s tightest lockdowns, according to official data and analysts.
As the biggest mainland lockdown in Shanghai ended at the end of May, an increase in holiday bookings indicates that tourism spending will recover in the second half of the year, according to Fitch Ratings.
The recovery comes as tourism revenue and the number of tourists in China fell by almost half in the first half of 2022 compared to the same period in 2019 before the pandemic, Fitch added.
“The easing of travel restrictions in China related to the Covid-19 pandemic and more targeted measures to combat the pandemic have helped boost tourism demand despite ongoing scattered outbreaks,” Flora Zhu and Jenny Huang, China analysts at Fitch Ratings, said in a note. at the end of last week.
“A slow recovery in the tourism sector is holding back the economy given its large contribution, which accounts for about 11% of GDP and 10% of employment in the country in 2019.”
Tourists walk under cherry blossom trees on Jimingxi Street on March 22, 2016 in Nanjing, Jiangsu province, China.
Following a series of loosenings from Beijing, including easing inter-provincial group travel bans and curbing excessive mobility controls by local governments in June, the number of travelers in July jumped more than 62% from the previous month, according to Fitch Ratings. with reference to official Chinese data.
Data from online travel agencies such as Tuniu Corporation showed a 112% increase in bookings compared to July, according to Fitch.
The average daily number of tourists at Xinjiang’s top-rated or ‘5A-level’ tourist attractions soared to 110,000 in July from 19,000 in May, according to Fitch analysts. The city of Dali in Yunnan province, a famous tourist spot, attracted 6.9 million tourists, up 46% from before the pandemic in 2019, they said.
The Fitch report said the recent outbreaks in Hainan, Xinjiang and Tibet are unlikely to hinder tourism recovery as these regions have fewer travelers compared to the rest of the country.
But the recovery, while robust, remains uneven across regions, with short-haul travel operators in particular doing better than national scenic travel companies that target national visitors, he added.
The report says Chinese consumers will continue to prioritize local and shorter travel amid the pandemic.
The pandemic has also affected domestic Chinese tourism, business consulting China Briefing said in a note last week.
Group travel destinations have lost some of their popularity as Chinese travelers prefer family vacations, health tours and research trips, he said.
CTrip, China’s leading online travel agency, said in its summer tourism report last month that there has been an increase in parent-child or family trips, as opposed to traditional Chinese big bus tours.
Chinese retail spending, including tourism, has shown signs of recovery.
New data on Monday shows retail spending rose 2.7% year-on-year in July after an unexpected 3.1% rise in June, although the latest results for July fell short of analysts’ expectations of a 4-5% rise.
It was the first increase in retail spending since February as consumption surged after the coronavirus and restrictions were lifted.
In May, as Shanghai struggled with the toughest lockdown, retail sales fell 6.7% year on year.