China’s holiday spending sends strong signal for consumption stimulus

BEIJING — China’s consumer market is recovering, but policymakers don’t seem to need the massive economic stimulus that investors have long expected.

The nine-day Lunar New Year, which ended on Monday, saw a steady increase in spending across the country, from hotel bookings to duty-free shopping. Rail travel hit a record with more than 18.7 million passengers in a single day.

CCB International Securities said in a report on Tuesday that the better-than-expected data suggests that the Chinese government’s recent support measures are effective and supports broader consumer trends, with spending on experiences such as travel and entertainment still growing faster than traditional goods.

China’s retail sales have remained sluggish since the pandemic. Unlike the US, which handed out cash to consumers, the Chinese government is offering trade-in programs and vouchers in return. Chinese authorities are increasingly emphasizing the need for consumers to increase their incomes, but have not yet provided details.

That’s not likely to change anytime soon.

“Policymakers are likely to capitalize on the positive (holiday) momentum and introduce targeted, gradual easing around the March second session to stabilize expectations and sustain economic recovery,” CCB analysts said, referring to the annual parliament starting next week.

Chinese Premier Li Qiang is scheduled to announce this year’s economic goals and policy priorities on March 5.

Despite the recovery in travel, consumers remained price sensitive. The number of daily tourist trips across the country rose by an average of 5.7% from a year ago to 2025, according to official holiday statistics released late Tuesday. Spending rose 5.5%, but slowed from 7% in 2025.

“While these trends reflect improved sentiment from the long holidays, consumers generally remain cautious with their budgets,” Morgan Stanley equity analyst Lillian Lu said in a note Wednesday.

In a sign of sustained deflationary pressures, the holiday recorded a 0.2% decline in average spending per tourist trip compared to a year ago, according to a CNBC analysis of official data.

China has extended the holiday period by one day compared to last year in order to increase consumer spending. Many people also took personal leave before and after the holidays, suggesting official statistics may not capture the full picture of spending.

“Longer holidays have encouraged families to travel together,” Jihong He, chief strategy officer at H World Group, one of China’s largest hotel operators, said in a statement.

“This change is driving demand for larger rooms and family-friendly configurations for shared experiences,” he said.

H World operates more than 30 brands and more than 12,000 hotels in mainland China. For Lunar New Year, the top 10 cities with hotel occupancy rates of 90% or above are all located in southern or coastal cities, including Sanya in the tropical island province of Hainan, the company said.

In December, China extended its zero-tariff policy to the island to encourage duty-free purchases of luxury goods on the mainland. Duty-free sales in Hainan during the holiday period rose 30.8% year-on-year to 2.72 billion yuan ($400 million), according to official statistics.

Alibaba’s travel booking platform Fliggy said bookings for hotel and theme park packages during the holiday season more than doubled from last year. More remote and scenic destinations such as Altai in Xinjiang and Pu’er in Yunnan province also saw bookings more than double, the company said.

China has sought to promote its growing services sector. The National Bureau of Statistics revealed this month that the weight of services in the consumer price index has increased compared to the previous reference period in 2020.

Even consumer goods in China are increasingly oriented towards meals and social activities, said Bruce Pan, an adjunct associate professor at CUHK Business School, in remarks in Chinese translated by CNBC.

He said the key to a consumption recovery was confidence in income and employment prospects, not shopping promotions. Policymakers should focus more on these long-term issues, Pan added.

Chinese leaders pledged in the fall to boost consumption over the next five years, then said they would prioritize domestic demand.

China’s local governments issued more than 2.05 billion yuan in consumption vouchers and subsidies before the holidays, “effectively securing a floor for demand,” central bank analysts said.

However, Liquan Ren, director of Modern Alpha at US-based fund manager WisdomTree, said prioritizing consumption does not necessarily indicate an all-out stimulus package.

Instead, the Chinese government appears to be focused on ensuring that consumption growth does not fall below a certain level, Ren said, suggesting that the sector’s growth rate is around 2% to 3%.