China’s tourism data paints bleak picture for its economy

The Chinese Economy Struggles Despite Increased Domestic Travel During Golden Week

The Chinese economy remains in the doldrums despite a relative uptick in domestic travel during the eight-day Golden Week holiday.

Domestic Travel Shows Slight Improvement, but Misses Government Targets

Experts were closely watching Golden Week this year to get the pulse of the Chinese economy, which failed to surprise observers as domestic travel witnessed slight improvement from pre-pandemic levels. China’s spending during the Golden Week missed the government’s estimated target published before the holiday began.

1. Over 826 million Chinese tourists made domestic trips, marking an increase of 71.3 percent and generating over $103.95 billion, according to the Ministry of Culture and Tourism data.
2. The data reveals that revenue generated missed the target the Ministry of Culture and Tourism set as the tourism data only etched slightly above the 2019 levels at 4.1 percent.
3. The government had estimated 896 million trips this year and revenue of 782.5 billion yuan ($107 billion), which failed to materialize during the Golden Week.

The tourism-related activities were restricted to the domestic market, unlike in the recent past when Chinese tourists flocked to foreign destinations during the 8-day holiday.

Real Estate Market Continues to Slow Down

The somewhat positive domestic travel data, though, masks the structural slowdown being witnessed as the troubles posed by the domestic real estate market haven’t gone away. The Golden Week has traditionally been when real estate sales witness an uptick as home buyers rush to close deals. But this year, despite expectations of recovery, new home sales were down by 20 percent in 35 cities as measured by floor space, according to state media outlet Securities Times.

Between January and August, commercial property sales were down by 7.1 percent year-on-year, according to data published by the National Bureau of Statistics (NBS). The investment into new real estate development was down by 8.8 percent year-on-year, according to NBS.

Challenges in the Chinese Economy

Earlier, the NBS had reported a slight improvement in the purchasing managers’ index from 50.2 in September to 49.7 in August. However, the PMI data may need to write a positive trend over the next few quarters to hint at a healthy shape of the economy.

Chinese state media isn’t hiding the weak real estate demand, which continues to drive down economic activity. “The August survey showed that residents’ willingness to buy houses and market confidence has weakened, despite the continued relaxation of policies,” reported Chinese state-owned business outlet Yicai, citing the UBS China Housing Survey.

Government Strategies for Economic Recovery

Experts have highlighted that Beijing has so far bet on increasing domestic consumption as a way to kick-start the economy’s engine. “According to the Politburo, the solution lies in restoring confidence, promoting domestic demand, stimulating innovation, speeding up construction of a modern industrial system, increasing ‘high quality’ growth, and focusing on emerging industries such as electric cars,” wrote Bert Hofman, Honorary Senior Fellow on Chinese Economy, Center for China Analysis, Asia Society Policy Institute.

Hofman laid out a series of painful reforms that Chinese politicians may have to undergo to return to the days of high-growth gross domestic product—which appears elusive at the moment. Hofman highlighted reforms to the financial sector and the pension system to boost the confidence of the domestic audience in a quest to shore up spending. “None of these reforms would be easy, and each one would negatively impact the interests of various groups, some of which have managed to block serious reform,” Hofman added.

SDGs, Targets, and Indicators

1. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
   • Indicator 8.1.1: Annual growth rate of real GDP per capita

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
   • Indicator 9.1.1: Proportion of the rural population who live within 2 km of an all-season road

3. SDG 11: Sustainable Cities and Communities

   • Target 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums
   • Indicator 11.1.1: Proportion of urban population living in slums, informal settlements, or inadequate housing

4. SDG 12: Responsible Consumption and Production

   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
   • Indicator 12.2.1: Material footprint, material footprint per capita, and material footprint per GDP

Analysis

The article discusses the Chinese economy’s performance during the Golden Week holiday and highlights the challenges faced in the tourism and real estate sectors. Based on this information, the following SDGs, targets, and indicators can be identified:

1. SDG 8: Decent Work and Economic Growth

The article mentions that China’s spending during the Golden Week missed the government’s estimated target. This indicates a potential slowdown in economic growth.

• Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
• Indicator 8.1.1: Annual growth rate of real GDP per capita

2. SDG 9: Industry, Innovation, and Infrastructure

The article highlights the impact of the real estate market on economic activity. It mentions a decline in new home sales and investment into new real estate development.

• Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
• Indicator 9.1.1: Proportion of the rural population who live within 2 km of an all-season road

3. SDG 11: Sustainable Cities and Communities

The article discusses the challenges in the real estate market, indicating potential issues with access to adequate, safe, and affordable housing.

• Target 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums
• Indicator 11.1.1: Proportion of urban population living in slums, informal settlements, or inadequate housing

4. SDG 12: Responsible Consumption and Production

The article mentions the need for reforms to boost domestic consumption and stimulate innovation. This aligns with the goal of achieving sustainable management and efficient use of natural resources.

• Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
• Indicator 12.2.1: Material footprint, material footprint per capita, and material footprint per GDP

Table: SDGs, Targets, and Indicators

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Source: newsweek.com

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