China kicks off National Day holidays as COVID saps consumption

SHANGHAI -- China's National Day vacation period started on Friday amid a growing inclination to avoid travel between provinces or cities and to stay away from new coronavirus outbreaks that have cropped up. As a result, the celebratory period is likely to have a subdued effect on consumption.

According to one estimate, the number of domestic National Day travelers will exceed 600 million, about 20% fewer than in 2019, before the pandemic began.

During Chinese New Year, also known as the Spring Festival, a span of holidays that starts in January or February, many people return to and spend time at their family homes. But Chinese are more likely to make trips during the National Day break.

This year's National Day period runs seven days, through Thursday. Since the novel coronavirus first broke out, domestic vacations have become more common, especially among wealthy Chinese who cannot make overseas trips.

Last year, National Day, which marks the foundation of the People's Republic of China, rolled around as the scourge of coronavirus was ebbing. Domestic travel demand recovered rapidly, and wealthy people went on spending sprees.

In Sanya, a city in the southern province of Hainan known as the country's leading resort, some hotels doubled their room rates during the National Day holidays in 2020. But the situation is quite different this year.

"The booking rate (at our hotel) is around 80%," an employee at a luxury hotel in Sanya said. "We are struggling compared with last year's National Day holidays. Although demand is stable, it does not easily return to pre-coronavirus levels throughout the year."

During last year's National Day week, Sanya hotels were able to double what they usually charge for rooms. (File photo by AP)

The Mid-Autumn Festival can sometimes act as a barometer for how National Day will turn out. During this year's festival, which ran from Sept. 19 to Sept. 21, tourism revenue in China totaled 37.1 billion yuan (about $5.7 billion), just under 80% of the take in 2019.

An employee at a resort hotel in Lijiang, a highland city in the southwestern province of Yunnan and one of China's leading tourist destinations, explained the hotel's situation.

"Our hotel normally should be fully booked, but our booking rate is around 60% this year," the employee said. "As the coronavirus has broken out sporadically in various parts of the country, the number of people who take a risk by going far away has been declining."

The highly contagious delta variant in early September was confirmed in Fujian Province. Since then, delta variant cases have been reported in the northeastern province of Heilongjiang and elsewhere.

Those regions have kept infections to a minimum by implementing strict lockdowns and aggressive PCR testing campaigns. But a strong sense of caution over sporadic outbreaks remains.

Mid-size travel agency Tongcheng predicts a total of 650 million domestic travelers through Thursday. The comparable figure for 2020 was 637 million, down 21% from 2019.

Meanwhile, there are rumblings the Chinese government is concerned about excessive anti-coronavirus measures putting a damper on consumption.

In February, shortly before this year's Spring Festival, coronavirus outbreaks hit various parts of the country. The widespread mandatory 14-day quarantines that were imposed as a result greatly restricted people's movement.

An official of the State Council, China's government, stressed that 80% of the country's popular tourist facilities will operate normally during National Day week. The official urged people to travel after taking sufficient anti-coronavirus measures.

But Chinese media reports say kindergartens, primary schools and middle schools in Shanghai are urging families with children to refrain from nonessential and non-urgent travel.

Students whose families do travel outside the city must present proof of a negative PCR test taken within 48 hours of classes resuming, media reports say.

A 35-year-old housewife living in Shanghai summed up the situation. "Families with children," she said, "have no choice but to give up on traveling."

If many urban Chinese stay put, tourist sites will miss out on one of their annual jackpots. This creates a possibility that the wealth gap between rural and urban areas will widen.

China's retail sales of consumer goods grew 2.5% in August from a year earlier after rising 8.5% in July, largely due to slumping sales at restaurants, which account for 10% of the total; they fell 4.5%. Consumer spending growth is clearly sluggish.

Since the pandemic began, China's consumer spending has been led by the wealthy. Now there are concerns about the country's property bubble, heightened by the debt crisis at China Evergrande Group.

If wealthy Chinese tighten their purse strings after purchasing properties for speculative purposes, the dark clouds casting gloom over National Day week could linger.