Record Tourist Numbers a Golden Sign for Economy
Among the reasons that analysts believe China’s economy may have begun to stabilize, TIME calls out the record tourist numbers during this month’s Golden Week holiday and explores whether Chinese consumers can buoy the country’s next phase of growth:
Throughout the week, Chinese social media sites were abuzz with reports from disgruntled tourists complaining about lengthy queues, chronic overcrowding, and awful traffic. One popular post on Weibo, China‘s top social network, featured pictures of tourists stuck in highway traffic jams getting out of their cars to play tennis or host picnics on the road. Another showed pictures of the beaches in the island province of Hainan covered in a thick blanket of tourist-created trash. A third told of a camel that dropped dead of exhaustion after ferrying tourists through the Gobi desert in the northwestern town of Dunhuang.
While travelers groaned, though, economists must have been grinning. For months, China-watchers have been worrying about the prospect of a ‘hard-landing’ for the Chinese economy. China’s economic planners have been working to shift China’s economy away from reliance on government-funded infrastructure spending and low-value manufacturing and toward a more consumer-driven model of growth. Thus far, their efforts have had limited success, with consumers largely choosing to hold onto their cash rather than fritter it away on discretionary spending. Meanwhile, demand for Chinese-made products from Europe and the US continues to lag, and China analysts are not convinced that the domestic consumers are ready to replace the flagging low-end manufacturing sector. Could the crowds signal that better times are coming?
Some are cautiously optimistic. Travelers pumped close to $35 billion into the domestic economy during the 7-day Golden Week period at the start of October, an increase of 45% compared to the same period last year. “People who believe China is mired in a crisis, with slumping growth and falling stock prices, could be shocked by this strong tourism data,” Ting Lu, an analyst at Bank of America Merrill Lynch, wrote in a recent report. The promising tourism data, he says, indicates that consumption spending is increasingly shifting towards leisure pursuits.
See also reactions from the economist community to the 3rd quarter and September figures released this week, compiled by The Wall Street Journal’s Josh Chin.