Commentary: Don’t Mistake China’s Travel Boom for an Economic Bust

Summary:

Recent trends in China’s economic activity indicate that while industrial output and traditional infrastructure investment have weakened, cross-region travel continues to remain unusually robust. Some analysts have interpreted this as an “early homecoming wave,” suggesting that migrant workers are returning to their hometowns earlier than usual due to a lack of job opportunities. This interpretation stems from observation of declining recruitment postings in late October, which are currently lower than the same period in the previous two years. However, this narrative does not align with actual mobility data and traffic patterns[para. 1].

A genuine “homecoming wave” typically creates a sudden spike in national mobility, with labor-exporting cities experiencing a surge in inbound travelers and manufacturing hubs showing increased outbound movement. This pattern was observed during the six days before the 2025 Lunar New Year when Zhoukou’s inbound migration index surged 50.6% year-over-year and Dongguan’s outbound index increased by 39.4%. In contrast, the current travel figures show a steady, elevated plateau without any abrupt spikes. Moreover, in labor-exporting areas like Nanchong and Zhoukou, cross-region movement is muted while intra-province travel makes up a larger portion of total mobility—77.5% and 64% versus pre-holiday periods of 59.2% and 36.6%, respectively. Labor-importing cities such as Dongguan and Suzhou also do not exhibit significant outbound migration; their year-over-year outbound figures are actually below the national average[para. 2][para. 3][para. 4][para. 5]. Thus, while increased travel is real, it does not support the early homecoming narrative[para. 6].

The high sustained travel is best explained by three factors. First, broader implementation of “autumn break” policies by provinces such as Sichuan and Zhejiang has led to more flexible travel schedules, boosting overall travel demand. Together, these regions represent over 10% of China’s permanent population, amplifying the national impact[para. 8]. Second, the composition of travel has shifted, with stronger movement toward higher-tier cities, suggesting increased business travel. In November, domestic flights rose about 2% year-over-year, and international flights by 10%. Also, top-tier cities like Beijing, Guangzhou, and Shanghai saw higher net migration compared to last year[para. 9]. Third, the weather has played a role: November’s average national temperature was 4.2°C, 0.2°C warmer than the five-year average, extending the travel season in regions like Tianjin and Shijiazhuang where migration indices exceeded normal levels by about 25%[para. 10].

This mobility surge has implications for China’s economy. Elevated travel supports service industries such as hospitality, dining, entertainment, and local transport and signals a shift of consumption from goods to services. This is evidenced by the mismatch since September between sustained high mobility and slowing retail sales growth. Services retail continues to improve while goods retail growth is down to roughly 4.1%, and core services inflation is higher than that for goods. Central and western regions are also experiencing stronger mobility, indicating a nationwide rebalancing of consumption away from coastal areas[para. 12][para. 13].

Globally, as countries urbanize and age, household spending typically tilts toward services. China mirrors this trend, with more single-person households and lower birth rates fueling demand for services such as culture, tourism, and personal care. Looking ahead to 2026, goods consumption may remain weak, while service consumption should remain resilient, potentially outperforming market expectations. Policy is also favoring services through measures such as increased holidays, consumption vouchers, and infrastructure aimed at services rather than goods. The next phase of Chinese consumption may be more about experiences and destinations than material purchases[para. 14][para. 15][para. 16][para. 17][para. 18].