Chinese travelers increased their spending by 8% year-on-year during the May Day holiday, reaching 180.27 billion yuan ($24.92 billion). However, this was still below pre-pandemic levels, reflecting ongoing challenges in the country’s economy. The May Day holiday is a key indicator of consumer confidence in China, and while spending showed an increase, consumption has been struggling amid a sluggish economy and the prolonged property crisis. The U.S.-China trade war also continues to add pressure, amplifying the economic difficulties. During the holiday, 314 million domestic trips were recorded, marking a 6.5% rise from the previous year. Additionally, transactions using Weixin Pay, a popular payment app, grew by over 10%, with restaurant spending seeing a notable uptick.
Despite this, total spending per person over the five-day holiday increased only slightly, by 1.5%, to 574.1 yuan, still lower than the 603.4 yuan spent in 2019. Cinemas, in particular, experienced a significant downturn, with box office sales dropping to 747 million yuan, less than half of what was achieved in 2024 during the same period. Furthermore, China’s services sector showed signs of weakening, as the growth of new orders decelerated in April. The slowdown was largely attributed to uncertainty caused by U.S. tariffs. The Caixin/S&P Global services purchasing managers’ index (PMI) fell to 50.7 in April, down from 51.9 in March, marking its lowest level since September. This drop reflects the broader trend in China’s official PMI survey, which also showed a slight decline in services activity.
The slowdown in services activity is part of a broader economic trend, with China’s economy facing deflationary pressures despite stronger-than-expected growth in the first quarter, supported by government stimulus. Service providers reported weaker business sentiment, citing U.S. tariffs as a primary concern. Employment in the services sector, which employs 48% of the workforce and accounts for more than half of China’s GDP, is also under strain, with companies cutting jobs to manage costs. Additionally, businesses reduced prices to attract customers, despite rising input costs.
To boost domestic demand, some experts suggest that consumption vouchers could offer a short-term solution, while long-term improvements to the quality and range of services are necessary to restore consumer confidence and unlock savings.
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