[Correspondent Diary] Concerns Over China's Labor Day Domestic Market 'Jjokbak'

Travel on the First Day of the Holiday Down 61% Compared to Last Year... Most Trapped at Home Due to Movement Restrictions
China's Economic Growth Driver 'Consumption' Faces Inevitable Plunge

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The number of tourists visiting nationwide attractions during China's Labor Day holiday was recorded at 230 million. This represents a 119.7% increase compared to the previous year. Tourism revenue during the Labor Day holiday reached 113.23 billion yuan (approximately 21.54 trillion KRW), surging by a remarkable 138.1% from the previous year. The Ministry of Transport of China estimated that an average of 53.47 million people traveled daily, totaling 267 million over the holiday period. This was the headline article on the front page of the Communist Party's official newspaper, People's Daily, on May 6 last year.

On the morning of May 1st, Labor Day, residents of Chaoyang District lined up for nucleic acid (PCR) testing. As of 3 p.m. on April 30th, Beijing reported a total of 67 confirmed COVID-19 cases (8 asymptomatic). Since April 22nd, the cumulative number of infections reached 295. Former residents of Chaoyang District underwent testing three times last week (Monday, Wednesday, and Friday), and they are required to take two more tests on the 1st and 3rd. Starting from the 5th, a negative test certificate within the past 7 days will be required to use public transportation such as the subway. Beijing city authorities have established a temporary hospital capable of accommodating 4,000 people simultaneously as a preventive measure and announced plans to create additional temporary beds.

This year, the situation has reversed 180 degrees. With the detection of the COVID-19 Omicron variant across all 31 provinces of China, travel during the Labor Day holiday returned to the levels seen in 2020 when COVID-19 was rampant. In fact, the Ministry of Transport announced on the 1st that the number of travelers on the first day of this year’s Labor Day holiday (April 30 to May 4) was 22.5 million, a 61% decrease compared to last year.

Labor Day, along with National Day (October 1), is considered one of China's biggest golden holidays. The period is long and the weather is seasonally favorable for travel. There is even a saying that during the golden holiday, people only see the backs of Chinese tourists at famous attractions. Beijing, Shanghai, Hangzhou, Xi’an, and Chengdu are among the most popular destinations.

The actual number of travelers is likely much lower than the Ministry of Transport’s announcement. First, Shanghai is on its 35th day of lockdown as of today. The city’s 25 million residents are confined. Under such circumstances, no one would dare to travel to Shanghai for leisure. Even if someone wanted to, booking flights and hotels is practically impossible.

Beijing is in a similar situation. The city is currently under district-level lockdowns, with controlled areas expanding daily. Cinemas, libraries, art galleries, and museums?all places people might visit during the holiday?are closed. Restaurants are not accepting customers and only offer delivery. Delivery workers dominate the streets. Beijing’s 22 million residents are staying home, ordering online. Other cities are not much different.

Although China is known as a country that thrives on manufacturing and exports, it is fundamentally a domestic consumption-driven economy. More than 65% of its Gross Domestic Product (GDP) comes from domestic consumption. During holidays such as Lunar New Year, Qingming Festival, Labor Day, and National Day, the wallets of 1.4 billion people open. Given the current atmosphere, China’s domestic consumption in the first and second quarters (possibly even lower than the first two quarters of 2020 when COVID-19 was rampant) can be bluntly described as 'dead in the water.'

Indeed, the non-manufacturing Purchasing Managers’ Index (PMI) for April, released by the National Bureau of Statistics of China the day before, was recorded at 41.9. A PMI below 50 indicates an economic contraction phase. The non-manufacturing PMI reflects the service sector’s performance. After bottoming out at 47.5 in August last year, the non-manufacturing PMI had consistently stayed above 50, but dropped below 50 again in March (48.4), and fell further to 41.9 last month. If this trend continues, the non-manufacturing PMI for May is likely to fall below 40.

Problems in China’s domestic consumption were also confirmed in the GDP data released on the 18th of last month. Retail sales in March declined by 3.5% year-on-year. This is the first time retail sales have turned negative since August 2020. The lockdown-centered 'Zero COVID' policy has poured cold water on domestic consumption.

Many may not care what Chinese people eat or live on, and some might even wish for the Chinese economy to collapse due to this COVID-19 outbreak, but given the close ties with the Korean economy, this situation deserves careful attention.

The Chinese Labor Day holiday ends on the 4th. It will be interesting to see what statistical articles related to the Labor Day holiday will be published in the May 5 edition of People's Daily.

This content was produced with the assistance of AI translation services.