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Chinese cities gear up to boost consumption during May Day holidays, further accelerating economic recovery

A shopping mall in downtown Shanghai displays the logo of the Shanghai 5.5 Shopping Festival to attract shoppers on April 27, 2024. Photo: Qi Xijia/GT

As the May Day holidays draw near, Chinese cities are buzzing with excitement as trade-in activities and consumption events are set to take center stage across the country, which will help boost the country’s recovery in consumption.

Experts expect that various consumption activities and a tourism boom will drive surge in spending, painting a vivid picture of a vibrant and dynamic market and accelerating China’s economic growth.

As part of a broad plan to boost consumption during the May Day holidays, the Interna-tional Consumption Season 2024 and the fifth Shanghai 5.5 Shopping Festival kicked off in Shanghai on Saturday. Shopping malls in the city are adorned with vibrant deco-rations, displaying notices for price cuts and trade-in offers that promise to entice shop-pers.

Travel agencies are also reporting a surge in orders, indicating strong consumer demand during the holiday season. The vigorous trend highlights the resilience and vigor of China’s consumption market, which has shown strong data for the first three months of 2024.

International Consumption Season 2024 is key event of 2024 Consumption Promotion Year in the second quarter.

During the launch ceremony, Shanghai unveiled new policies to further encourage and optimize sports events, tourism, and exhibitions, improve payment services, and imple-ment measures to support consumer products trade-ins. Various brands, including JD.com, Pinduoduo, Meituan and ele.me, are offering billions of yuan in consumption coupons.

The Ministry of Commerce (MOFCOM) is guiding various regions to organize a varie-ty of consumer promotion activities during the May Day holidays with a global premier festival in Beijing, a sports consumption festival in Shanghai and a food festival in Southwest China’s Yunnan Province, He Yadong, a spokesperson of the MOFCOM, told a press conference on Thursday.

In promoting the trade-in plans, the MOFCOM on Friday announced a new policy to promote auto trade-ins with a subsidy of up to 10,000 yuan ($1,378) for those who replace their old cars with new-energy vehicles as part of an action plan to foster trad-ing-in of consumer goods.

The move comes after 14 Chinese departments, including the MOFCOM, on April 12 jointly released an action plan to promote trade-ins for home appliances and autos in order to accelerate the phasing-out of high-polluting cars and increasing the market share of high-efficiency home appliances.

“These industries are closely related to consumers’ daily lives. The trade-in plans for home appliances and autos is expected to trigger a one-trillion-yuan market,” Zhang Yi, CEO of iiMedia Research Institute, told the Global Times on Saturday.

The strong consumption demand can also be felt in the tourism sector, with railway tickets and travel products selling quickly for the upcoming holidays, indicating a high willingness for travel and a potential surge in consumer spending during the May Day holidays.

A report from Trip.com Group sent to the Global Times showed that the number of tourism trips is expected to increase from the high base set last year, with a significant growth in outbound and inbound travel bookings. As of April 16, outbound flight searches have increased by 56 percent year-on-year, according to the report.

Travel agency Uzai.com has seen a more than 400-percent increase in the number of people purchasing their outbound travel products for the upcoming May Day holidays compared to last year. Data from Fliggy showed that the booking volume for outbound cruises has increased by over 16 times compared to last year, with some products al-ready sold out.

Chinese people’s spending on luxury goods and cultural events are also increasing. Hermes on Thursday reported a 17-percent surge in first-quarter sales, while increasing numbers of Chinese shoppers are splashing out on luxury items in Japan on the weak yen, according to media reports.

Concerts and performances have also been increasing and becoming fully booked since the start of the year. In the first quarter, the number of national performances increased by 72 percent year-on-year, revenue has more than doubled, and viewership is up 77 percent, according to the Economic Daily.

Analysts anticipate that the upcoming May Day holidays will once again drive signifi-cant consumer spending, providing a substantial boost to China’s GDP growth.

“With various government policies and initiatives in place, such as trade-in programs and travel enthusiasm, we expect to set a new record of consumer spending during this holiday period,” Zhang said.

China’s first-quarter retail sales jumped 4.7 percent year-on-year to 12.03 trillion yuan, underscoring stable consumption expansion after a surge in consumer spending during the Spring Festival holidays.

Following a 4.7-percent growth in the first quarter, there is still potential for further con-sumer spending growth, experts said, expecting the development momentum of con-sumption to provide new impetus to propel the world’s second-largest economy.

“Looking ahead to the rest of the year, we anticipate a moderate rebound in consump-tion at around 5 to 6 percent, driven by the gradual improvement in economic condi-tions, rising household incomes, and continued policy support for private enterprises and consumer demand,” Wu Chaoming, a deputy head of the Chasing Research Insti-tute, told the Global Times.

Tian Yun, a veteran economist based in Beijing told the Global Times on Saturday that potential for consumption in China is undeniable and more policies are expected to re-store consumer confidence and create a better consumption environment.

“Once this consumption potential is unleashed, the speed of China’s economic growth will further accelerate,” Tian said.

In the first quarter of this year, consumption remains the main driving force behind eco-nomic growth. China’s GDP grew by 5.3 percent year-on-year, with final consumption expenditure contributing 73.7 percent and driving GDP growth by 3.9 percentage points.

World Bank raises forecast for UAE’s real GDP growth to 3.9% in 2024; 4.1% in 2025

Photo: WAM

The World Bank has raised its forecast for the UAE’s real GDP growth to 3.9% in 2024, compared to its previous forecast in January of 3.7%.

In an economic update published today on the latest economic developments in the Middle East and North Africa region, the World Bank said it had raised its forecast for the UAE’s economic growth to 4.1% in 2025 from its previous forecast of 3.8%.

The report also indicated that the UAE’s current account surplus is estimated to rise to 8.4% in 2024 and 8.3% in 2025, and that the country will achieve a surplus of 5.1% in its fiscal balance by the end of this year and 4.8% next year.

For MENA, the World Bank said that the region is forecasted to grow 2.7 percent in 2024, which represents a return to the low growth in the decade before the global pandemic. For 2025, the report said that the MENA region is expected to grow at 4.2 percent. In the GCC economies, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, growth will improve to 2.8 percent in 2024 and 4.7 percent in 2025. The pickup in growth is mainly driven by higher oil output due to the phasing out of oil production cuts and robust growth in the non-oil sector linked to diversification efforts and reforms.

MENA’s GDP per capita is expected to grow a modest 1.3 percent in 2024, according to the bank, which is an improvement from the 0.5 percent rate in 2023. This increase is driven almost entirely by GCC economies, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, whose GDP per capita growth in 2024 is projected to be 1.0 percent, a significant improvement from the 0.9 percent decline in GDP per capita in 2023.

China’s tourism booms during Qingming Festival holidays, reflecting nation’s strong vitality and potential

Passengers line up to board a high-speed bullet train at a railway station in Nanjing, East China’s Jiangsu Province, on April 6, 2024, the last day of the Qingming Festival holidays. About 119 million domestic tourist trips were made during the holidays. Photo: VCG

China’s consumption market during the just-ended Qingming Festival holidays showed better-than-expected performance, underscoring the strong vitality and potential of the economy while injecting new momentum in driving stable economic recovery.

During the Qingming Festival holidays, lasting from Thursday to Saturday, ticket bookings for popular domestic scenic spots surged by 5-fold compared with the same period last year, noted a report from a Chinese online travel agency Qunar sent to the Global Times on Saturday.

About 119 million domestic tourist trips were made during the holidays, up 11.5 percent from the same period in 2019, according to the Ministry of Culture and Tourism. The trips were estimated to bring in 54 billion yuan ($7.56 billion) in tourist revenue, an increase of 12.7 percent from 2019.

Many tourists kicked off the holidays with short-distance journeys. Notably, Tianshui in Northwest China’s Gansu Province and Kaifeng in Central China’s Henan Province – which have become internet sensations lately – saw the amount of hotel bookings jump by 12-fold and 4.5-fold respectively, according to Qunar.

Crowds appeared across tourist spots in China as many struggled to reach their destinations. A Beijing resident surnamed Li told the Global Times that his family has to wait for about two hours to park the car at the Juyongguan section of the Great Wall in Beijing on Thursday because there are so many tourists.

According to film ticketing platform Maoyan, the box-office revenue has reached 823 million yuan for the holidays, surpassing last year.

The service sector now contributes to around 60 percent of China’s economic growth. The robust recovery of tourism, hospitality and transport sectors will boost the overall recovery of domestic consumption and contribute to stable economic recovery, Xu Xiaolei, a marketing manager at China’s CYTS Tours Holding Co, told the Global Times on Saturday.

The potential of the consumption market is set to be further unleashed during the upcoming May Day holidays, Xu said, noting the surge of China’s consumption market reflects the strong vitality and potential of the economy.

Stable recovery

In addition to the robust recovery in the cultural and tourism sectors, the country’s manufacturing purchasing managers’ index (PMI) posted better-than-expected result in March, indicating notable increase in internal demand.

Analysts said that the world’s second-largest economy got off to a good start in the first quarter of 2024, laying a solid foundation for achieving the pre-set annual GDP growth target of around 5 percent.

“Between January and March, China’s economic growth rate is expected to reach around 5 percent on a yearly basis, supported by a couple of factors including consumers’ increased willingness to spend, stable infrastructure and manufacturing investment as well as improved external environment,” Wen Bin, chief economist from China Minsheng Bank, told the Global Times on Saturday.

There are multiple aspects where Chinese authorities can step up efforts in the second quarter to bolster the upswing recovery of the economy, according to Wen.

This year’s Government Work Report outlined an array of measures to boost growth this year. According to the report, a proactive fiscal policy and a prudent monetary policy will be continued in 2024, and a series of tasks will be taken to modernize the industrial system and develop new quality productive forces at a faster pace.

Wen said the central bank is expected to strengthen efforts to enhance “precision and effectiveness” of monetary policies so as to inject new momentum to the high-quality development of the economy. On the one hand, efforts should be made to boost economic structure adjustment, economic transformation and upgrade and the transition of old and new momentums, while on the other hand, the authorities should better meet reasonable consumption and fund-raising needs with targeted measures, he said.

Cao Heping, an economist at Peking University, said he is optimistic about the country’s GDP growth rate in the first quarter. “The development of new quality productive forces has triggered the new driver of China’s development,” Cao told the Global Times, noting the country will remain the main driver of world economic growth in 2024.

Positive prospect

Driven by China’s stable economic recovery so far this year, foreign-funded companies have voted with their feet to briskly expand investment in China for unprecedented opportunities amid the country’s high-level opening up.

In January, US retail giant Costco Wholesale opened a new store in Shenzhen, Guangdong Province, which is the sixth Costco store on the Chinese mainland. The number of registered members surpassed 140,000 on the first day alone, setting a record globally, according to local media outlet Shenzhen Daily.

On March 21, US smartphone maker Apple inaugurated its largest retail store on the Chinese mainland in Shanghai, with Apple CEO Tim Cook opening the doors of the new store and welcoming Chinese consumers.

During a meeting with Chinese Commerce Minister Wang Wentao on March 22, Cook said China is an important market with a rich talent pool and innovation vitality, and a crucial supply chain partner for Apple. He reaffirmed that Apple is committed to a long-term development in China and plans to increase investment in China’s supply chain, research and development, and marketing.

In order to steadily promote high-level opening-up and make greater efforts to attract and utilize foreign investment, the General Office of the State Council issued an action plan on March 19. The action plan proposes 24 measures across five aspects, including expanding market access, enhancing appeal to foreign investment and fostering a level playing field.

The Chinese government is cultivating new quality productive forces, signifying the country is on the correct development trajectory, John Ross, a senior fellow at the Chongyang Institute for Financial Studies, told the Global Times in a recent interview in Beijing.

Based on observations and research over the past 30 years related to China’s economy, there is no reason why China cannot meet its 2024 GDP growth target, and undoubtedly, the country will remain the main driver of world economic growth as it has for the past 40 years, he said.

Foreign executives, officials bullish on Chinese economy in Boao, denying ‘Peak China’ rhetoric

Participants take photos at the permanent site of Boao Forum for Asia in Boao, South China’s Hainan Province, on March 27, 2024. Photo: VCG

During a panel discussion at the Boao Forum for Asia (BFA) Annual Conference, executives from foreign-funded enterprises and officials from international institutions said they remained bullish on China’s economic growth in 2024, noting that innovation, consumption and green development will constitute a new China story.

As the world’s second-largest economy and important growth engine for the world economy, China’s development has attracted much attention. The remarks by the participants at the BFA strongly denied the so-called Peak China rhetoric, as the country’s economy is on course to recover.

Jean-Pierre Raffarin, former French prime minister, said that China’s 2024 growth target of about 5 percent is good, and the world economy needs China’s growth, as well as its innovation.

Steven Barnett, the IMF’s senior resident representative in China, said that last year, China’s economy contributed one third of global growth, and its growth is beneficial to the world.

Every one percentage point rise in China’s GDP growth will drive an increase of 0.3 percentage points in the economic growth of other countries, so strong GDP growth in China is not only good for China, but also for the rest of the world.

Regarding this year’s GDP growth target, Denis Depoux, global managing director of Roland Berger, said that the figure is not important in itself, more important thing is the transformation that is represented underneath the 5 percent goal.

There are some main themes to the new China story: innovation, new quality productive forces, decarbonization and consumption.

This photo taken on March 25, 2024 shows the Boao Forum for Asia (BFA) International Conference Center in Boao, South China’s Hainan Province, is ready for the upcoming forum. The BFA Annual Conference 2024 will be held from March 26 to 29 in Boao, focusing on how the international community can work together to deal with common challenges and shoulder their responsibilities. Photo: cnsphoto

Multinational companies, which have benefited from China’s double-digit average economic growth rate in past decades, now eye more opportunities in the Chinese market, including industrial upgrading and green development, Depoux said.

Michele Geraci, former undersecretary of state at the Italian Ministry of Economic Development, told the Global Times that China’s economic growth has made a positive contribution to regional and global development.

He has observed that China is moving some of its manufacturing into other countries in Asia that may appear lower on the manufacturing chain and are still behind the development curve. This change is a win-win for both China and other Asian countries, the Italian scholar said.

While praising China’s huge achievements in the green economy, Geraci said that this is one of the key areas for future economic cooperation between Europe and China. He called for China-EU cooperation in the green transition.

“The other area for such cooperation is the development of infrastructure in third countries, such as in Asia and in Africa. In the developing markets of Africa, for example, China has a strong presence and European companies, including Italian ones, can bring complementary expertise,” said Geraci.

Since the beginning of this year, China’s economic fundamentals have continued to improve, and positive factors bolstering the economic rebound have accumulated and increased.

Figures from the National Bureau of Statistics showed that in the first two months, the value added of industries over the designated size grew by 7 percent year-on-year, retail sales rose by 5.5 percent, investment in the manufacturing industry increased by 9.4 percent, and total trade grew by 8.7 percent, ushering in a promising year.

“If China’s economy maintains a growth rate of at least 5 percent this year, it would be feasible to achieve a contribution rate of 30 percent or more to global economic growth, provided that the exchange rate remains relatively stable,” Tian Yun, a Beijing-based economist, told the Global Times on Thursday.

“If trade with the US follows the recovery seen in January and February, it would significantly boost the Chinese economy. In addition, residential consumption holds significant potential to support economic growth,” Tian noted.

If consumer spending and investment flourish, achieving a 5 percent growth rate this year is attainable, given ample market opportunities and robust production capabilities of China, Tian said.

Well calibration of fiscal, monetary policies to ensure 5% GDP growth in China

A view of the Lujiazui area in Shanghai Photo: VCG

A well-calibrated fiscal and monetary policy combination, being crafted and orchestrated by Chinese government, will help resolve the intrinsic problems hidden in China’s economy. An aggressive fiscal stimulus, coupled with proactive while prudent monetary policy, is generally thought to provide the economy with sustainable energy, shepherding it to grow by around 5 percent in 2024.

Independent economists of many international organizations give high marks for Chinese economic policymakers’ learning and wit in blending the monetary and fiscal policies in the past four decades to shore up rapid economic growth, and at the same time successfully resisted the cyclical pressures of inflation and deflation.

Entering 2024, China’s economy has to overcome the “scar effect” left by the COVID pandemic, including a relatively lackluster domestic consumption and a churning real estate market. Amid the lingering concern about another public health upheaval, the people now tend to snap shut their pocketbooks, and the millennials and generation Z are increasingly hesitant to raise children.

Under these circumstances, the traditional days of steadily growing consumer prices are gone, as China witnessed several months of negative CPI growths in the second half of 2023. To deal with the deflationary pressure, China’s central bank moved to reduce the bellwether loan prime rates (LPR) of both one-year and five-year lengths. Last month, the central bank went aggressive, cutting the five-year LPR by a full quarter percentage, which also has the effect of ramping up the country’s humdrum housing sales as mortgage rates are slashed too.

Meanwhile, the policy-makers decided to introduce proactive fiscal stimulus measures to fuel up public spending and economic growth.

In 2024 alone, at least 4.9 trillion yuan of central and provincial government bonds will be sold, with the proceeds to be channeled to building up important public infrastructure projects and fostering new quality productive forces to meet China’s massive market demand for home-grown advanced semiconductor chips, newest AI and algorithm innovations, nationwide 5.5-G mobile network coverage and highly efficient digital business platforms – able to catapult China’s economy to new heights of growth before 2050.

China is determined to “choose transition from high rates to high-quality of growth,” said International Monetary Fund Managing Director Kristalina Georgieva at the just concluded China Development Forum held in Beijing. In her speech to the event, she remarked that China has entered a new era of economic growth, and the country will continue to be a key driver of and a contributor to global economic growth in the coming years.

And, renowned US economist Nicholas Lardy, senior fellow at the Peterson Institute for International Economics and a former senior fellow at the Brookings Institution, told Chinese media that it is unwarranted for many media pundits in the West to disseminate the narrative that “China’s economy is collapsing” and faces a catastrophic outcome. Instead the economy is recovering, and last year’s 5.2 percent GDP growth “is impressive” among major economies.

For a long time, one of the important reasons why the Chinese economy has been able to scale new heights constantly by overcoming domestic difficulties and withstanding external headwinds is its deep understanding of economic laws, and the decision makers’ creative ways to exploring new and potent growth drivers, as well as the country’s firm determination to implement systemic restructuring, such as the country’s unswerving focus on developing clean renewable energies and battery-powered electric trucks and cars.

Georgieva thought highly of China’s green development. She described China as a global leader in deploying renewable energy with enormous potential, adding that China was making rapid progress in green mobility. China’s remarkable development success has delivered tremendous benefits to hundreds of millions of people in the world, she said.

Georgieva said that China’s high-quality development still has a bearing to deepening marketed-regulated reforms and giving priority to private sector growth. Deep structural reforms can enhance the conditions for entrepreneurship, innovation and economic performance. For example, a boost to government finances at the macro level could allow some tailored micro changes in taxation policies on businesses to foster fast growth of new enterprises, aligned with the central bank’s monetary policy to increase liquidity through reserve ratio reductions and interest rate cuts.

And, ramped-up government spending is a key component of aggregate demand that can be strategically important for economic development. China’s central government has announced the issuance of new ultra-long special treasury bonds in each of the following several years to focus on funding major national projects. No matter it is the development of industrial parks, transportation hubs, public services and highly educated and skilled Chinese work force, government spending is indispensable to underpin the growth of future strategic industrial lines.

The drivers of demand include household consumption of goods and services, private investment, government investment and net exports. As to augmenting China’s domestic consumption – a pivotal part of economic growth, the government has pledged to implement a national drive to provide incentives to encourage trade-in of old household appliances, cars and furniture with new models. The replacement of old automobiles, inefficient in fossil fuel use and polluting the air, with Chinese brand-new electric vehicles will also significantly help improve China’s urban environment. And, Chinese local authorities are encouraging citizens to have more family outings and leisure time to increase cultural and tourism spending.

Regarding foreign trade, despite the headwinds of geopolitical tensions which are affecting trade and capital flows, China saw a robust take-off of foreign trade in the first two months this year, largely thanks to the high-quality and low-price of made-in-China goods, like heavy machinery, home appliances, electric cars and a wide variety of electronic devices. In 2024, China’s total exports of goods will likely grow by 6-8 percent over 2023. Investment, domestic spending and export will guarantee the economy to expand by around 5 percent this year.

IMF head Georgieva said she is confident that China and the world can tackle the challenges this globe is now facing and they can always cooperate to create a more prosperous future in this century.

The author is an editor with the Global Times. [email protected]