Consumption Bright Spots Appear in China as Year Kicks Off (AI Translation)

【周刊提前读】开年消费平稳有亮色 零售业态持续分化

[para. 1] The 2025 Spring Festival in China witnessed a significant highlight in the form of "Nezha: The Demon Child Strikes the Sea" (or "Nezha 2"), which achieved record-breaking box office success, surpassing 10 billion yuan and setting several industry records, including the highest box office in a single market globally. This animated film's success mirrored the previous cultural tourism surge seen with "Black Myth: Wukong," and its popularity has spilled over into increased interest in tourism destinations related to Nezha, resulting in a boost in local hotel bookings in places like Yibin City and Tianjin.

[para. 2] Following the film's success, there was a notable increase in the consumption of Nezha-related merchandise, with major sell-outs reported in markets such as JD Supermarket's dedicated page and Pop Mart's collectible items. This consumption pattern reflects a broader trend seen during the Spring Festival, with 2024's nationwide box office revenues having previously fallen, indicating a potential market rebound in 2025. Analysts like Wu Chaoming highlight that consumption during this period is driven by complementary patterns that blend movie-watching with other offline activities, further aided by culture, tourism, and dining vouchers issued by local governments.

[para. 3] The Year of the Snake in 2025 was the first Spring Festival after the successful bid for World Heritage status and an eight-day public holiday, resulting in what authorities described as a "steady start" for the economy. Data from the State Administration of Taxation showed a year-on-year increase in daily average sales in consumer-related industries, with specific growth seen in goods and service consumption. The tourism and culture sectors experienced significant growth in service consumption, outstripping the increase seen in goods consumption.

[para. 4] A critical trend identified by economist Wu Chaoming is the shift towards service consumption, although China's domestic service consumption remains lower than international benchmarks, indicating room for growth. During the Spring Festival, both box office and tourism income hit new highs, assisted by blockbuster releases, setting a record for total box office revenue during the holiday season. Meanwhile, domestic trips and spending also increased, with popular destinations and inter-provincial travel data reflecting a robust pattern, along with cross-border travel seeing a similar uptick.

[para. 5] Government policies, such as "trade-in" initiatives and expanded subsidies for high-tech consumer goods, have driven noticeable growth in consumer goods sales. Yet, lower prices and increased volume are evident in sectors like airfares and hotels, reflecting continued consumption downgrade since the onset of the pandemic. Despite this, prestige retail sectors in regions like Hainan faced declines, underscoring a shift in consumer preference towards travel experiences over luxury goods, as noted in a report by Moody's.

[para. 6] Various analysts, including those from Ping An Securities, highlight that while tourism numbers rose during the Spring Festival, per capita tourism expenditure did not reach pre-pandemic levels, reflecting ongoing cautious spending behavior. Travel recovery was mainly driven by increased traveler numbers rather than rising spending levels. In the aviation sector, airfare prices dropped due to early travel trends and oversupply relative to demand, paralleling a significant rise in the preference for alternative travel modes like high-speed rail and self-driving tours.

[para. 7] Despite the internal tourism nuances, cross-border travel saw a marked increase, facilitated by China's visa-free policies and pent-up global demand. International flight activity, specifically, saw a noteworthy uptick, with inbound tourism benefiting from the expanded visa-free status and subsequent recovery in air travel. Analysts like Yi Xun anticipate this trend accelerating, ultimately boosting domestic consumption.

[para. 8] Regionally, first-tier cities struggled with consumption growth compared to lower-tier cities, attributed partly to the impact of real estate and stock market depreciations. This disparity has facilitated a return-home holiday trend, promoting consumption in home regions. Key levers identified for invigorating consumption include leveraging wealth effects through stock market performance and stabilizing real estate markets, thereby enhancing middle-class income levels.

[para. 9] As China's household consumption as a share of GDP lags behind other major economies, government initiatives aiming to bolster consumption have become crucial. Programs such as consumer vouchers, trade-in schemes, and subsidies have fueled retail growth in specific sectors, with an optimistic outlook for demand, albeit amid concerns over reliance on income levels for continued growth.

[para. 10] The diverse trajectory of consumption during the 2025 Spring Festival indicates robust movement across multiple sectors, yet it remains to be seen whether medium-to-long-term factors will constrain the extent of this rebound.