Vacation Consumption Boosts Expansion Hopes
Chinese consumer spending has exploded during the seven days of the National Day in the first week of this month, driven by huge demand for food services and entertainment businesses, adding positive signs to the recent momentum of economic growth, according to data from national payment platforms.
During Golden Week, NetsUnion Clearing Corp, China’s national online payments clearinghouse, which operates under the supervision of the central bank, reported an increase in the number of online payments compared to the same period of last year.
During the holidays, NetsUnion recorded total transactions of 7.6 trillion yuan ($ 1.18 trillion), and the average daily payment increased 20% year-on-year. And the peak was reached on October 1 with a daily payment volume of 1.23 trillion yuan, according to data released by the platform on Friday.
The data shows that consumption in food services has grown rapidly and that the average daily online transactions in this industry have increased by 46.57% from the previous year, NetsUnion reported.
In addition, Chinese consumers’ online spending on movies and theme park trips during the week grew more than 60% year-over-year, according to NetsUnion.
China UnionPay, the country’s largest bank card processor, also reported an increase in consumer payments during the holidays. From October 1 to 6, the total number of transactions through Union-Pay’s platform reached 2.31 trillion yuan, and the average number of daily transactions increased 32% from the previous year.
Economists expected retail sales growth to increase slightly from September to October as the recent spate of COVID-19 infections in the country were brought under control.
Dominik Peschel, head of the economic unit at the Asian Development Bank’s resident mission to China, said, “We expect household demand to pick up gradually, which should also help the service sector. We would also see pent-up demand because it was difficult to travel and it was difficult to take vacations for a while.
“We believe people will travel more and demand more services once the COVID-19 situation is fully under control and the restrictions are lifted. “
Bank of China economists said China’s consumption still faces uncertainties caused by repeated cases of COVID-19 and is limited by household income in the fourth quarter, but they also see favorable factors boosting the resumption of consumption.
“As the country continues to build its capacity to control the pandemic in a scientific manner and continues to increase its COVID-19 vaccination rate, it is unlikely that we will witness another COVID-19 outbreak that will affect the nationwide consumption and entertainment. This is useful for recovery. of several types of consumption, including tourism, accommodation, food, films and exhibitions, ”BOC economists said.
Supported by favorable policies, small and micro enterprises will hopefully maintain a positive recovery momentum, which will help support a gradual recovery in employment and household incomes, economists said.
They expected Chinese consumption to grow by around 12.5% year-on-year in 2021, and that two-year average consumption growth will reach around 3.5%.
However, some consumer spending indicators have shown a slower recovery. For example, during the National Day “Golden Week”, national visits and tourism income were respectively 29.9% and 40.1% lower than pre-pandemic levels, according to a research note. of Nomura Securities.
Lu Ting, chief economist for Nomura in China, said he expected Beijing to step up monetary and fiscal support to stabilize economic growth in the coming weeks.