China's travellers prepare for May Day holiday, but will it be a golden week for consumer spending?

Zhao Xin has mixed feelings about finally making her first trip outside China for three years during the coming "golden week" holiday, which is being closely watched as a litmus test for consumer spending amid the overall economic recovery efforts.

"I am both very excited and anxious, I have been trying to plan very thoroughly as travelling outside the country is so unfamiliar to me now," said the 34-year-old marketing executive from Shanghai, who travelled abroad around five times a year before the outbreak of the coronavirus.

Zhao is heading to the French capital of Paris for a 12-day trip with friends, all of whom were locked inside their flats during last year's citywide lockdown of China's commercial and financial hub.

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Like many of China's working population, Zhao is set to make use of the coming five-day golden week holiday, which starts on Saturday.

Domestic travel has already rebounded to pre-Covid levels, according to online travel booking platforms, but outbound bookings have yet to recover.

Searches for overseas travel on Ctrip - China's largest online travel platform - were 120 per cent of that in 2019, but searches for overseas hotels had dropped by 30 per cent from 2019, the company said last week.

"Due to the limitations on flights, policies on visas and total days of holidays, outbound travelling has not completely recovered to the pre-Covid level," said Jia Jianqiang, the CEO of the small group travelling app, Friends and Family.

"But there has been significant growth, and we expect outbound travel to be 60 per cent of what it was in 2019," Jia added in an interview published by the official WeChat account of the Ministry of Culture and Tourism.

A total of 14,540 international flights to China have been scheduled for May, according to aviation data provider FlightGlobal.

This would still be 64.5 per cent below the levels for the same month in 2019, but the difference has been shrinking since the start of the year as airlines have gradually reinstated flights.

Short-haul trips to the likes of Thailand, Hong Kong, Japan, Singapore, Malaysia, South Korea, Macau, Indonesia and the Philippines dominate the list of outbound destinations, according to Ctrip, with the United States the only major long-haul destination.

Thailand received over 150,000 Chinese tourists in February, according to the Ministry of Tourism and Sports, which was 85 per cent below February 2019 despite hitting a three-year high.

But bookings for hotels, flights and attractions within mainland China for the coming holiday on Ctrip and fellow travel app Fliggy had already surpassed the same period in 2019 two weeks before the start of the coming golden week holiday.

Booking platforms Meituan and Dianping also said domestic travel bookings are 200 per cent of the levels for the same period in 2019, marking the highest in five years.

A 26-year old Chinese traveller, who was only willing to give his last name as Zhao, wanted to go to Phuket for a beach holiday in Thailand, but switched to a three-day hiking trip in China's Sichuan province.

"The flight price would probably be similar ... [but] Thailand is so popular now, it's crowded everywhere," he said.

Sanya - a city on the southern end of China's Hainan island - Dali and Lijiang in the southwestern province of Yunnan, Chengdu in Sichuan province, Xian in Shaanxi province and Beijing are the most popular domestic travel destinations for the May holiday, according to tour booking site Tuniu.

Domestic consumption is hoped to be one of the major drivers for China's economy this year as Beijing strives to hit its 5 per cent gross domestic product (GDP) growth target

China's retail sales rose by 10.6 per cent in March, year on year, marking the highest level of growth since June 2021.

But despite China recording 4.5 per cent GDP growth in the first quarter, weak industrial output and fixed-asset investment, as well as slowing price indices indicate an uneven economic recovery.

The economy is also challenged by a high youth unemployment and a faltering property market, which could limit spending.

"The high demand for travelling could more likely be an immediate consumer reaction in the early post-Covid times," said Yu Chunhai, deputy dean of Renmin University's School of Economics.

"Other daily consumption will need a longer period of time to recover, as we are not seeing a significant increase in household income right now."

Chinese bank deposits increased by 26.3 trillion yuan (US$3.8 trillion) last year, with the record-high level of savings suggesting a lack of confidence in the economy, Yu added.

"We should observe how the travel atmosphere is like for the summer. Together with an expected recovery in the economy in the later half of the year, we can then see whether consumption has really been boosted," he said.

Shanghai-based Zhao has budgeted 50,000 yuan (US$7,250) for her trip to Europe, but she is concerned about job security due to falling demand for advertising and marketing as clients have cut their budgets over the past year.

"It is already quite lucky that my salary did not get cut," she said.

"I will not be spending as carefree as I would like, but I have already waited for three years, so I also need to enjoy it while it lasts."

This article originally appeared on the South China Morning Post (SCMP).

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