In Depth: Holiday Spending Gives Chinese Consumption a Needed Boost

During the recent Lunar New Year holiday, the animated film “Ne Zha 2” became China's highest-grossing film, accumulating nearly 12.8 billion yuan ($1.7 billion) in sales, positioning it as Asia’s first film in the top 10 global box office charts and the highest-grossing animated film ever [para. 1][para. 2]. This success coincided with a spike in tourism, where regions associated with the mythical character Ne Zha saw increased activity, and its associated merchandise sold out quickly, indicating a rise in consumer interest [para. 3]. Generally, a substantial increase in consumer spending was observed during the eight-day holiday, with an uptick in retail and tourism sectors alongside booming box office sales, driven by local government incentives [para. 4].

The economy experienced a 10.8% increase in average daily sales compared to last year's holiday, influenced by increased consumption of goods by 9.9%, and services by 12.3%, as reported by the State Taxation Administration [para. 5]. Despite this surge, there were signs of a cautious consumer mentality with per capita tourism spending down compared to tourist trip numbers [para. 6]. The Chinese government estimates indicated a 26% rise in tourist trips with a modest 15.2% increase in spending compared to 2019, reflecting slower per capita expenditure even in the face of a domestic spending push [para. 6].

The film industry, on the other hand, saw a significant recovery with box office earnings reaching 9.51 billion yuan from 187 million cinemagoers, substantially higher than the previous year when box office revenue had dropped 23% [para. 9]. “Ne Zha 2,” a prime driver of this resurgence, helped dispel concerns about cinema’s post-pandemic prospects by attracting audiences with its engaging storyline [para. 11]. However, there are concerns that the momentum is not sustainable and would require greater diversity in film offerings to maintain audience interest beyond the film’s hype [para. 10].

Tourism revenues have surpassed pre-pandemic figures, although travelers exhibited a preference for less costly and shorter trips, resulting in reduced per capita spending [para. 17]. This trend affected airfares, which fell by 16.6% year-on-year, amid an oversupply in China’s civil aviation market, with more travel options like rail and car preferred by consumers [para. 19]. The weakened demand for air travel was counterbalanced by increased cross-border trips and a surge in foreign tourists' spending, uplifted by expanded visa-free policies [para. 19][para. 21].

Dining sectors experienced contrasting fortunes during the holiday compared to 2024, with venue proximity to tourist sites benefiting sales [para. 23]. However, overall restaurant revenues fell by 10.8 percentage points, driven by ongoing cautious consumer spending post-pandemic recovery [para. 26]. While some F&B outlets recorded remarkable growth near attractions, a generally weak consumer demand reflected a drop in sales for numerous businesses [para. 24][para. 27].

The Chinese government's efforts to boost spending through trade-in programs and the introduction of consumption vouchers showed efficacy, with notable increases in sales of electronics like phones and tablets [para. 31]. However, economists caution that these measures may not be sufficient for sustained long-term growth as household income and future income expectations remain pivotal factors for increasing consumer spending [para. 32].

In summary, while the Lunar New Year holiday reignited several sectors, particularly the film industry and tourism, underlying economic challenges and cautious consumer behavior reflect broader challenges in realizing sustained domestic consumption growth [para. 26][para. 28].