On the first day of a significant public holiday, travel within China witnessed a notable increase, with rail and car journeys dominating amidst economic uncertainties. Domestic airline fares have declined significantly, leading to forecasts indicating a preference for driving over flying, or early bookings to save costs. Travelers are adapting to economic constraints, with some opting to drive instead of flying to save money.
Although travel activities have regained momentum since the relaxation of strict COVID control measures in late 2022, consumer spending on such trips has not kept pace, posing limitations on broader economic recovery efforts. China’s target economic growth for 2024, set at approximately 5%, is anticipated to be challenging to achieve without substantial stimulus measures. This is evident in the recent slowdown in manufacturing and services activity in April.
With consumer spending lagging behind the increase in travel volume, some companies are adapting their strategies to cater to cost-conscious consumers. Yum China, for instance, plans to open 30% of its new stores in new cities or roadside locations, as same-store sales at such outlets saw a 20% increase during Lunar New Year in February. These initiatives aim to capitalize on the surge in holiday travel volume while aligning with consumer spending patterns.
However, concerns remain about the broader economic implications of subdued consumer spending. While travel activities have surged, it remains to be seen whether this momentum can be sustained and translate into a meaningful boost for the economy.
