Shanghai and other parts of China remained locked down or subject to travel restrictions during a long bank holiday weekend in early April, causing an official tally of tourism receipts to plummet to just over a third of pre-pandemic levels.
Hector Retamal | AFP | Getty Images
BEIJING — As mainland China navigates its worst Covid-19 outbreak in two years, levels of consumer spending have fallen to levels not seen since the pandemic’s initial shock.
Travel restrictions and county or city lockdowns kept people from traveling over a public holiday, which officially ran Sunday through Tuesday.
And tourism spending by those who have ventured out recovered by just over a third, or 39.2%, from levels recorded during the 2019 holiday, according to the Culture and Tourism Ministry.
That’s a far slower pace than during the Lunar New Year holiday earlier in the year, when tourism spending was 56.3% of 2019 levels.
For more than three weeks, the number of symptomatic Covid cases in mainland China has exceeded 1,000 a day, touching regions across the country. The number of asymptomatic cases is far higher.
Shanghai, the country’s largest city, is one of the hardest hit by China’s wave of the highly transmissible Omicron variant. Metropolis was due to end a two-part lockdown on Tuesday but gave no indication earlier this week of when the restrictions would be lifted.
The markets could underestimate the economic damage [from Covid].
Ting Lu
China’s chief economist Nomura
Overall, about 193 million people in the country are living under full or partial lockdown, in regions that account for about 22% of China’s GDP, Nomura’s chief economist for China Ting Lu estimated in a report on Tuesday.
“Markets could underestimate the economic damage,” he said. “China’s [zero-Covid strategy] can save many lives, especially among the elderly, but it also has significant economic costs and causes collateral damage for people who cannot receive normal medical treatment for diseases other than Covid.
“Unlike in Spring 2020, when it was widely believed that Covid-19 would end in the summer, we currently see no end in sight; this has increased uncertainty, which is quite negative for investments,” Lu said.
The number of cases and deaths from Covid in mainland China remains below that of other major countries. Large factories in the country have been able to keep production going by keeping workers on site, with economists expecting the service industry to remain hardest hit.
Shanghai Disney Resort, which has been closed for more than two weeks, said Wednesday its theme parks and hotels will remain closed until further notice.
Tourism revenue for the final long weekend holiday fell 30.9% from the same period last year to 18.78 billion yuan (US$2.93 billion), the ministry said. Tourist trips fell 26.2% to 75.4 million, or 68% of pre-pandemic levels, compared to the same period last year, according to the data.
People who were able to travel over vacations mostly booked trips to nearby scenic spots or in the countryside, according to booking site Trip.com.
In a country where online shopping is rampant, Covid has also affected parcel delivery.
The number of packages received and delivered during the holidays fell about 13% each year from a year earlier, according to the State Post Bureau. It wasn’t immediately clear whether logistics issues or consumer demand were the main reason for the decline.
The optimism of the service companies sinks
The Caixin Services Purchasing Managers’ Index (PMI), a measure of market conditions, showed on Wednesday that business activity in the sector contracted at the fastest pace in two years in March.
“Companies frequently mentioned that stricter virus containment measures had disrupted operations and weighed on customer demand in March,” Caixin said in a press release. For the third straight month, data showed service firms were reluctant to hire more staff.
Service companies generally remained optimistic about growth over the next 12 months. But the press release said optimism had fallen to the lowest level since the second half of 2020 “amid concerns about how long business operations would be impacted by the pandemic and the war in Ukraine.”